Stock Market Extends Loss to 2nd Day

The negative investors' sentiment on the Nigerian bourse was extended into the second consecutive day of trading as sell offs persisted in value stocks across all sectors driving the broader index southwards. The All Share Index shed 2.1% to close at 23,333.34 points. The negative market performance was broadly driven by profit taking in NIGERIAN BREWERIES (-4.9%), ZENITH (-4.5%), and DANGCEM (-1.8%). The market eroded N171.5bn in value as market capitalization settled at N8.0tn. Activity level however strengthened on the back of the selling pressures as volume and value traded improved 82.1% and 3.7% to 260.1m units and N1.7bn respectively.

Mixed Performance across Sectors
The Oil & Gas index appreciated 1.4% as SEPLAT (+8.3%) led the pack of gainers. Similarly, the Insurance index improved 0.1% on account of price appreciation in AIICO (+4.9%). On the flipside, the Banking index dipped the most (-4.6%) against the backdrop of the rout in ZENITH (-7.6%) and GUARANTY (-4.0%). Losses in DANGCEM (-1.8%) and NIGERIAN BREWERIES (-4.9%) dragged the Industrial and Consumer Goods indices southward by 2.0% apiece.

Sentiments Remain Negative
Investor sentiments today remained unchanged as market breadth -- measured by advancers/decliner ratio -- closed at 0.5x due to 11 stocks that advanced while 23 declined. Top gainers were SEPLAT (+8.3%), CADBURY (+5.0%) and AIICO (+4.9%) while the top losers were TRANSCORP (-9.2%), UBA (-7.7%) and FCMB (-7.6%). The MPC's inaction on exchange rate at its last meeting contributed to the weakened sentiment for equities which spurred the sell offs today.

Afrinvest Research, in its dealers' perception note, stated that “As uncertainty in the foreign exchange rate market continues to mount, coupled with sustained volatility in oil prices, we anticipate more volatile sessions ahead in the Nigerian stock market. Even as this poses major risk to short term retail investors, active institutional investors could still take arbitrage opportunity in the volatile market movement. We also consider the current valuation of value stocks cheap enough for fundamental retail investors with a long investment horizon. Short term retail investors are advised to underweight on equities and overweight fixed income.”

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