Friday, Jul 10th 2020 5:05 PM

Market Digest Nigeria


Stock Market Loses 1.4% as Profit-taking Impacts Recovery

Profit-taking in bellwethers such as Dangote Cement Plc, Nestle Nigeria Plc and some banking stocks halted the equities market’s further recovery last week.

The market had jumped 7.19 per cent the previous week, recovering about N801.3 billion in value due to bargain hunting by investors. However, the trend changed last week as investors locked in profits recorded during the short bull-run. As a result, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell 1.4 per cent to close lower at 22,921.38, while market capitalisation shed N167.9 billion to close at N11.778 trillion.

Although there were positive performances on two trading sessions, decline for three days led to the negative close. Investors’ sentiments were still being influenced by the impact of the coronavirus in Nigeria that has continued to spread.

Globally, COVID-19 continued to spread, with the total number of cases reaching about 2.7 million at the weekend, up from the 1.9 million recorded the previous week while the death toll rose to 191,167 from 130,885 persons. Unfortunately, optimism about a potential vaccine was dashed as Gilead’s ‘Remdesivir’ failed the first clinical trial.

According to Afrinvest, the United States remains the hardest hit with active cases and death toll totaling 888,709 and 50,243 respectively.

“Similarly, an additional 4.4 million people filed unemployment claims, taking total Coronavirus-induced job losses to 26.5 million (16 per cent unemployment rate). The US Senate has approved a Coronavirus Relief Bill of $484 billion to provide new funding for distressed small businesses, with readiness to deploy more relief packages. In the coming week, we expect concerns on the spread of the virus to shape investor sentiments in the markets,” Afrinvest said.

Considering the effect of COVID-19 on Africa, the markets were generally bearish as five of the six tracked closed negatively. While Nigeria declined by 1.4 per cent. Mauritius’ SEMDEX dipped by 6.5 per cent. Egypt’s EGX 30 went down by 3.2 per cent. Similarly, Morocco’s Casablanca MASI and Kenya’s NSE 20 indices trended south, losing 0.5 per cent and 0.3 per cent in that order. Only the Ghana GSE Composite index gained, garnering 2.2 per cent.

Performance across the BRICS markets was mixed as three of five indices lost. South Africa’s FTSE/JSE All-Share and Russia’s RTS gained, up 0.6 per cent and 0.3 per cent respectively. On the flip side, Brazil’s Ibovespa led the losers, down 6.0 per cent due to political crisis in the country. Similarly, China’s Shanghai Composite and India’s BSE Sens indices also ebbed lower by 1.1 per cent and 0.8 per cent respectively.

The Asian and Middle East markets recorded a mixed performance with two of five indices closed in the red. Qatar’s DSM 20 and Saudi Arabia’s Tadawul ASI went down by 1.2 per cent and 0.4 per cent respectively. But Turkey’s BIST 100 gained the most, rising 2.6 per cent as investors reacted positively to the 1.0 per cent cut in interest rates. UAE’s ADX General and Thailand’s SET indices trailed, advancing 2.4 per cent and 1.6 per cent in that order.

Also, performance in the developed markets was negative with all indices track recording losses. In the US, the S&P 500 and NASDAQ declined 2.3 per cent and 1.8 per cent respectively. The United Kingdom’s s FTSE All Share fell 0.1 per cent just as Germany’s XETRA DAX and France’s CAC 40 indices fell 2.2 per cent and 1.9 per cent in that order. In the same vein, Japan’s Nikkei 225 and Hong Kong Hang Seng Indices lost 3.2 per cent and 2.3 per cent week-on-week respectively.


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