Nigeria’s stocks shed N245bn as investors go for attractive yields

Iheanyi Nwachukwu Mar 5, 2021

Domestic investors — Only in the month of May 2013, domestic investors controlled 51.32 percent of equity trading leaving 48.68 percent for foreign investors.

Investors in Nigeria’s equities market became worse off in the trading week ended March 5 after booking about N245billion loss as funds moved out of equities due to impressive yields in the fixed income (FI) market.

Investors are now battling with the decision to either buy into the recent dip or to stay out of the market pending when there are major positives capable of reversing the negative trend.

The market disappointed despite significant increase in prices of crude oil –Nigeria’s major source of dollar revenue, coupled with the attractive dividend yields of a number of dividend-paying counters.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation moved from week-open highs of 39,799.89 points and N20.823 trillion respectively to close the review week at 39,331.61 points and N20.578trillion.

The NSE ASI closed negative in four out of the five-day trading week, causing the benchmark performance indicator of the Bourse to decrease by 1.18percent week-on-week (WoW).

This negative was fueled mostly by remarkable losses in consumer goods, insurance and oil & gas stocks as evidenced in their sectoral indices.

NSE-30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity decreased by 1.46percent in the review trading week.

Except NSE Industrial index which rose by 1.39percent, other sectoral indices closed in red –NSE Consumer goods index (-6.30percent), NSE Insurance index (-4.99percent), NSE Oil & Gas (-2.16percent), NSE Pension (-2.83percent), and NSE Banking (-1.94percent).

The stock market of Africa’s largest economy had bullish run in 2020 with a record-breaking return of +50percent amid unattractive yields in the fixed income space, placing it as world’s best.

Likewise, the market kicked off 2021 with similar trend, gaining 5.3percent in January, but since February (-5.6percent) it has maintained a southward direction. As at close of trading on Friday, the market has lost 2.33percent of its year-open value.

While investors’ confidence remains weak on Custom Street, market watchers at Lagos-based Vetiva Securities said they expect the low prices of major bellwether stocks coupled with attractive dividend yields to fuel some buying interest in the coming week.