Nigerian stocks on Friday breached the 30,000 points psychological mark to close at 29,616.038 points, only 0.98 percent higher than their 52-week low of 29,329.62 points.
Analysts had bet that a successful conduct of the 2019 elections and dovish stance of the US Federal Reserve would add impetus to the performance of equities.
But there has been immense sell-off even as some companies recorded earnings growth and declared dividends.
Experts blame the loss of appetite for Nigerian assets by investors on the inability of the Muhammadu Buhari-led administration to articulate policies that will jumpstart economic growth since winning re-election.
They added that negative news such as the huge fine slapped on telecommunication giant MTN Nigeria are some of the reasons investors have been apathetic towards Nigeria’s risk assets.
“There is need for a catalyst, something to spark the market. Unfortunately, there is nothing exciting investors. One major thing that would have excited investors is the listing of MTN and it is taking forever,” said Yinka Ademowagun, analyst at United Capital Ltd.
“For instance some investor would have got wind of the court ruling on Teleology before the market. Of course, valuations are cheap and attractive and serve as entry point but harsh and unpredictable macroeconomic environment remains a cog in the wheels,” said Ademowagun.
Ademowagun said the only thing happening at the moment is the N30,000 minimum wage that is expected to boost consumer spending but the problem is how government will fund the package.
Since the conclusion of the presidential elections, the local bourse has lost on 21 out of the 29 trading days while the ASI has shed 9.6 percent within this period.
“Sentiments from the foreign investor community indicate lack of optimism that the hard decisions on structural reforms will be taken by the re-elected president,” said analysts at CSL Stock Brokers.
The analysts added that concerns remain on macroeconomic stability, weak operating environment and, more importantly, the need to insulate the economy from external shocks emanating from downturn in oil prices.
Fourth quarter results of companies showed banks’ earnings are growing at a slow pace due to a low yield environment and they will have to generate more income from internet banking and cut costs to maintain earnings growth.
Fast Moving Consumer Goods firms are the hardest hit from a harsh and unpredictable macroeconomic environment as low consumer demand continues to undermine growth.
For instance, data gathered by BusinessDay showed only Nestle Nigeria and Unilever recorded an uptick in revenue, profit, and margin while the rest fell.
For the year ended December 2018, Dangote Flour Mills plc posted a loss of N1.15 billion, from a profit of N15.13 billion the previous year – the first loss since 2015 when Africa’s richest man Aliko Dangote repurchased the miller from South African food giant, Tiger Brands.
Nigerian Breweries plc’s net income dipped by 26.48 percent to N9.98 billion in December 2018, from N13.58 billion the previous year, while revenues were down 5.79 percent to N324.38 billion.
Dangote Sugar Refinery plc’s net income was down by 44.75 percent to N21.97 billion in the period under review as against N39.78 billion the previous year, while sales dipped by 26.44 percent to N150.37 billion as at December 2018.
BALA AUGIE
