Stock investors trapped in 52-week loss of N2.6trn

By Iheanyi Nwachukwu

Investors’ appetite in the Nigerian stock market remains watered by a colossal loss in excess of N2.6trillion traced over a 52-week period to June 30 2015.

The checks at the Nigerian Stock Exchange (NSE) “fact sheet” over that period shows more of negatives across major traceable gauges like average daily transactions (volume and value of stocks traded), and value of listed equities and bonds.

Though the trend has shown that the Lagos bourse is well below the water this year in excess of minus 12 percent in return, investors are still hunting for bargain in value stocks driven by attractive valuation and a relatively clearer economic path for the nation.

Nigerian stocks performance by sector and capitalisation over the same 52-weeks period to June 30, 2015 shows that the value of agriculture stocks declined by 9.26percent to N68.37billion from N75.34billion as at June 30, 2014; conglomerates lost 39.47percent of their values to N196.59billion from N324.75billion; construction/real estate declined by 45.21percent to N125.72billion from N229.45billion; consumer goods was down by 17.61 percent to N2.96trillion from N3.6trillion; and financial services was down by 14.54percent to N3.38trillion from 3.96trillion.

Also, healthcare stocks lost 10.40percent of their values to N67.95billion in the 52-week period from N75.83billion; ICT stocks declined by 51.25percent to N37.99billion from N77.92 billion; industrial good recorded 52-week loss of 19.64percent to N3.66 trillion as at June 30, 2015 from N4.55trillion; natural resources stocks value dropped by 5.52 percent to N7.18 billion from N7.59billion; oil & gas stocks also recorded value decline of 25.83percent to N786.56 billion from N1.06 trillion; while services rose to N134.38 billion, an increase of about 87.57percent from N71.64billion as at June 30, 2014.

At the Nigerian Stock Exchange, average daily volume of stocks traded declined from June 30, 2014 level of 456.70million to 394.58million as at June 30, 2015. Average daily value of stocks traded declined from N5.01billion to N4.56billion; average daily transactions also decreased from 5,000 to 4,722.74; while number of listed companies decreased from 192 to 187.

The rub-off of these negatives reflects on total market capitalisation (bonds and equities) at N17.02trillion from June 30, 2014 level of N19.09trillion.

Listed Nigerian equities have lost N2.06trillion having declined from N14.03trillion as at June 30, 2014 to N11.43trillion as at second quarter to June 2015; while the value of bonds rose from N5.06trillion to N5.58trillion in the same period.

“The NSE is in need of new listings, not least to represent more accurately the structure of the economy. The more liquid stocks are dominated by banks and consumer goods companies.

“An energy company has announced plans to list in Lagos within one year, and there are unconfirmed reports surrounding a leading telecoms operator”, the Gregory Kronsten led team of research analysts at Lagos-based FBN Capital said in their recent note.

“We have often said that the Federal Government could help the process along. When the auction of the frequency spectrum licenses in the 2.6GHz band finally takes place, we do not see why awards could not be conditional upon a partial listing,” the analysts added.

Between January and June 2015, total foreign transactions at the Nigerian Stock Exchange reached N588.99billion, a slight increase from N587.15billion when compared with January to May period of 2014.

Recently at the recent Lagos Business School breakfast session, Bismarck Rewane and his team of analysts noted how the volatility in forex and interest rate markets fuel consumer and investor anxiety. This is in addition to investors’ expectation of federal government cabinet lists which is now expected in a few days from now.