Uncertainty surrounding the possible outcome of Nigeria’s forthcoming elections is reflecting on the volume of equities that are trading on the nation’s bourse.
The remarkable disinterest for Nigerian stocks shown by both foreign and domestic investors became glaring in the recently released equities trading “fact sheet” for the third-quarter (Q3) of 2018.
The Total Volume of stocks traded in the Q3 period decreased to 16.26billion, representing 20.10percent drop from 20.35 billion units traded in the corresponding period of Q3, 2017.
Also, the market witnessed a 20.10 percent decline in average daily volume to 258.07 million, from 322.97 million recorded in the same period of 2017.
The average daily value of stocks traded decreased by 42.98percent to N3.26billion, down from N5.72billion in Q3’17. Average daily transactions stood at 3,444 from 3,999 in Q3’17.
The value of stocks listed on the Nigerian Stock Exchange (NSE) decreased by 2.11percent to N11.97trillion, from N12.23 trillion in the comparable period.
The Fact Sheet revealed equities turnover velocity in Q3’18 at 6.85percent against 11.79 percent in Q3’17. Number of Listed Companies decreased from 166 to 164.
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The Lagos bourse last week posted a bearish performance as the All Share Index (ASI) fell by 0.4percent week-on-week to 32,058.28 points, while year-to-date (YtD) loss printed at minus 16.2 percent. The market capitalisation also settled lower at N11.7trillion.
“The investors’ apathy that dominated the equity market in Q3 2018 continued in October. The increase in the yields on fixed income securities in Nigeria, increase in the interest rate in advanced countries, and pullback from foreign investors due to the political considerations were the major drivers of the decline in the NSE ASI,” said FSDH Research analysts in their November strategic report seen by BusinessDay.
The analysts noted that domestic investors also adopted a cautious approach to the equity market, in the face of the bearish market trend.
Analysis of equity transactions for the period ended September 30, 2018 show foreign investor’s outperformed domestic investors by 29.54percent, as total foreign transactions increased by 18.82 percent from N70.97 billion in August to N84.33 billion in September 2018.
Foreign outflows increased by 27.60percent from N34.31 billion to N43.78 billion whilst foreign inflows increased by 10.58percent from N36.66 billion to N40.54 billion over the same period.
FSDH Research said they observed that some investors strategically entered the market in October to take advantage of the low prices of stocks as the volume of stocks traded increased, adding that “however the general decline in the prices of stocks led to a decrease in the value of traded stocks.”
Afrinvest research analysts in their November 19 note linked last week’s trading outcome on lingering bearish sentiments and persistent political uncertainties “which continue to pose downside risks.”
Irrespective of the overall negative performance in the prior week, Afrinvest analysts noted investors’ higher buying interest in bellwethers.
Although, the analysts expect the broad performance of the NSE Index to remain weak, “as investors sentiment remains pressured by developments in the polity.”
Less than three months to the February 16, 2019 slated for the Presidential election, the curtain for official campaigns was lifted and it started on an economic note as aspirants released their economic policy agenda for public perusal.
Aspirants of the two major parties, All Progressive Congress (APC) and Peoples Democratic Party (PDP), led the way.
The incumbent, APC’s President Buhari, presented a colourful scorecard of his performance thus far while highlighting the “Next Level” of achievements to pursue if re-elected.
On the other hand, the main opposition, PDP’s Atiku Abubakar, highlighted the failures of the current administrations at the same time highlighting its plans to ”Get Nigeria Working Again.”
Central to both policy agendas is the usual pre-election promises of improving security, infrastructural development, and economic empowerment.
“We think this provides a blueprint for both parties to push their agenda before the electorates while availing investors with a template to assess the outlook for the Nigerian economy over the next four years under either the APC or the PDP,” according to Lagos-based research analysts at United Capital Plc.
IHEANYI NWACHUKWU
