The thirty most capitalised and liquid stocks are at the receiving end of the severe downturn of the Nigerian stocks market, which has failed to respond to any form of stimulus that had been hoped would see the market turn the corner in 2019.
Listed companies on the Nigerian NSE30 index worsened in terms of return to investors, leaving only four of total listed firms on the NSE 30 index with positive return so far in the year, as hopes of a dovish Federal Reserve, successful conclusion of 2019 elections, oil price rally, and expectations that earning seasonings would convince the lethargic market turn to dust.
Analysis revealed that at the end of the first quarter of 2019, 12 out of 30 most capitalized companies on the exchange showed positive returns to investors as their share prices weathered bearish pressure in the market.
However with the market remaining negative, only four of the NSE 30 stocks show positive returns in what would be testament to the strong sell-offs in the space.
As the end of trading on Wednesday, year to date performance of the equity market plunged to -10 percent, a double digit decline for the first time in 2019.
Consequently, average year to date performance of companies listed in the NSE30 sub-index deteriorated to about -6 percent against -0.15 percent at the end of Q1 2019.
Of the 30 stocks considered, Dangote flour has appreciated the most, gaining 137.22 percent since trading commenced for 2019. Sterling Bank (31.57%) and Union Bank (20.53%) remained the only other NSE 30 stocks with double digit growth while Forte Oil has gained 9.75 percent on year to date.
The grim performance of the Lagos bourse raises questions as to the possibility of seeing more stock slump-even currently appreciating stocks- in the wave of pessimism flooding the market.
Although, analysts anticipates the possible impact MTN listing would have on the performance of the equity market.
“The listing of MTN won’t necessarily slow down the bearish trend of the market instead investor in the bid to balance their portfolio would sell off some of their existing holdings to purchase the shares of MTN,” Paul Uzum, a Lagos based stock broker on the NSE explained.
Slight contrast to this above view, “The impact of this listing on the equity market will be short term as general excitement of the listing may see investors shift attention from other stocks to focus on MTN in the short term, hence slowing down bearish trend in the market,” Gbolahan Ologunro, analyst at CSL stockbrokers explained.
Regardless of the outcome, the low price of many stocks may present a good entry points into those with good fundamentals and growth prospects as many stocks are currently cheap.
Across sectorial index, the industrial goods sector recorded the worst hit YTD, underperforming grossly the all share index at -14.07 percent after index closed on Wednesday at 1063.71 points.
The oil and gas sector came closely behind with a year to date performance of -13.55 percent, whereas Consumer goods sector followed as index plunged by -11.99 percent, underperforming the entire market.
Although all sectorial indexes have experienced a bearish trend year to date, the banking sector however outperformed the ASI by 70 basis points only at the close of mid-week’s trading.
David Ibidapo & Segun Adams
