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Market Digest Nigeria

Finance

CBN policy reversal negatively affects capitalised companies of NSE

CBN

CBN policy reversal negatively affects Dangote, MTN, eight other most capitalised companies of NSE.

NSE

At the end of the first quarter 2021, the top ten most capitalised companies on the Nigerian Stock Exchange (NSE) dipped by 6.82 percent in value, reflecting the general outcome of the capital market.

Policy affected top ten capitalised companies

The trading floor had lost N634 billion during the period under review, as the capital struggled following the reintroduction of high interest rate in the open market operations reports from the NSE.

During the COVID-19 pandemic, the Central Bank of Nigeria had directed investors towards the stock market by offering unattractive interest, which forced investors to look towards the capital market to store their wealth.

Since the economy reopened fully in the second half of 2020, the apex bank had reversed the policy. This decision has reduced foreign investment and investors’ appetite for the capital market.

This means the lower the investor participation, the lower the deals, and it has a ripple effect on the listed firms trading in the capital market, with the top ten most capitalised companies not spared of the downward spiral.

How the ten most capitalised companies performed

During the first quarter period when the capital market depreciated by three percent, the top ten capitalised companies’ value plunged by 6.82 percent, losing over N1 trillion in the first three months of this year.

The top ten companies consist of Dangote Cement, Airtel Nigeria, MTN Nigeria, BUA Cement, Nestle, Guaranty Trust Bank, Zenith Bank, Nigerian Breweries, Stanbic IBTC and Lafarge Cement.

Analysis of their performance showed that as at the end of December 31, 2020, they contributed over N17.70 trillion as combined market capitalisation. Their value, however, dropped to about N16.49 trillion as of April 2, 2021.

Breakdown of trillion naira company performance

Year to date analysis showed Dangote Cement, the most capitalised company on the NSE dipped from N4.02 trillion in January to N3.7 trillion in February, before plunging further to N3.6 trillion in at the end of March.

Airtel became the second most capitalised firm, surpassing its market rival, MTN, after it value settled at N3.49 trillion in March. This was close to the same value it recorded in February, N3.49 trillion, but below the N3.5 trillion recorded in January.

MTN became the third after its value dropped to N3.2 trillion in March, against the N3.46 trillion and N3.7 trillion recorded respectively in February and January of the same period.

BUA Cement declined through the three months of the first quarter, as its market capitalisation slumped from N2.7 trillion to N2.5 trillion and further to N2.4 trillion respectively from January to March.

Nestle also followed the same path during the period under review, as its value depreciated from N1.2 trillion to N1.1 trillion and N1.08 trillion between January to March ending.

Billion naira company performance

GTBank continued in the decliners’ pather for the three months in the first quarter, having recorded its market valuation dropping from N1.1 trillion in January, to N912.4 billion at the end of February, before plunging lower to N881.46 billion in March – falling from the trillion naira club.

Zenith Bank couldn’t break the decline trend, as it fell to N853.9 billion, then further down to N794.3 billion and declined lower to N693.8 trillion between January to March respectively.

Stanbic IBTC market capitalisation rose at the end of March to N565.8 billion, but not before declining in February to N444.2 billion from January’s N499.8 billion.

Nigerian Breweries also rebounded in last month after declining from the N503.8 billion recorded in January to N395.8 billion the next monthx, but rallied round as it market capitalisation closed March with N407.8 billion.

Lafarge Cement market capitalisation fell during the three months period, recording N483.2 billion in January, N357.6 billion in February and N348.7 billion recorded in March 2021.

End note

Aside from Stanbic IBTC and Nigerian Breweries, the remaining eight companies slumped throughout the first quarter. Only Stanbic IBTC and Nigerian Breweries recovered at the end of March

But Stanbic IBTC was the stronger quoted firm among the top ten most capitalised companies, as only the lender closed March higher than the value it closed January with, at the capital market during the first quarter of this year.

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