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Market Digest Nigeria


NSE records N48bn loss in Q1 2019

NSE records N48bn loss

Nigerian Stock Exchange (NSE) records N48bn loss in the first quarter of 2019 (Q1). Trading activities closed on a negative trajectory, recording N48 billion loss to close at N11.672 trillion in market capitalisation, as growing political tension enveloped the equity market, due to general election that took place during the quarter.

Though the market put up a good appearance in the month of February, some market analysts believed investors traded cautiously in the short to medium term, as selloffs persisted, amidst the growing political and security tension of the general polls. Further investigation showed that activities on the local bourse, which opened the trading month at N11.720 trillion in market capitalisation and 31.430.50 in index points at the beginning of trading on January 2, 2019, closed the quarter at N11.672 trillion and 31,041.42 index points.
Consequently, the market earned year-to-date loss of about N48 billion or 1.23 per cent. Further analysis on monthly basis showed that following pre-election tension, the stock market, which opened at N11.720 trillion in market capitalisation and 31.430.50 in index points at the beginning of trading on January 2, 2019, closed the month on January 31, 2019 at N11.394 trillion and 30,557.20 index points, culminating to a month-to-date loss of about N326 billion or -2.78 per cent.

However, the NSE finished the month of February on the positive trajectory, recording N435 billion gain to close at N11.829 trillion in market capitalization. This is despite bleak predictions by some market analysts following growing political tension.

The market, which opened the trading month at N11.394 trillion in market capitalisation and 30.557.20 in index points at the beginning of trading on February 1, 2019, closed the month at N11.829 trillion and 31,721.76 index points, earning month-todate gain of about N435 billion or 3.81 per cent. The local bourse extended loss in the month of March with a decline of N157 billion in market capitalisation or 2.14 per cent loss in index to close at N11.672 trillion from N11.829 trillion recorded in February.

Reacting to the current state of the market, analysts at Cordros Capital said: “In the absence of a positive catalyst, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuation remain supportive of recovery in the mid-to-long term.” FXTM Research Analyst, Mr. Lukman Otunuga, said that there are higher expectations for Nigeria’s economic recovery after the fastest growth since 2015 was recorded during the fourth quarter of last year. Otunuga, in a report sent to the New Telegraph, noted that as the nation draws further away from the worst effects of the recession, several important economic benchmarks show further signs of improving economic stability.

“Yearly Gross Domestic Product (GDP) for 2019 is heading steadily towards a range of 2–2.3 per cent compared to 1.93 per cent in 2018,” he said. “In addition, Purchasing Power Parity (PPP) and GDP per capita appear stronger. On the downside, real GDP growth is underperforming on average compared to other emerging economies, possibly due to the lingering effects of global oil price volatility and weaker growth in the manufacturing sector.” Otunuga noted that in spite of the headwinds, Nigeria has the potential to grow in 2019 on the back of stabilizing oil prices. “There is new impetus to diversify away from oil reliance and the chance to focus on economic rebuilding,” he said.

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