Investors have sold-off on stocks at a frantic pace in the last 8 months, with the big companies bearing most of the brunt.
The most capitalised firms on the exchange have shed N2.36 trillion cumulatively since the start of the year, BusinessDay analysis show.
The NSE30 index which consists of the 30 most capitalized firms on the exchange has been battered, with share prices languishing at two-year lows.
While investors still await fiscal reforms around major sectors of the economy in which analysts believe would create better business environment for listed firms, “I think the market will remain choppy,” Gbolahan Ologunro, equity analyst at CSL stockbrokers noted.
“Until we see bold policy statements and reforms from the fiscal authorities in the areas of power and oil which are major catalyst to spur market performance,” he added.
BusinessDay however excluded MTN Nigeria and Airtel Nigeria, instead compared companies within the same time frame.
Among peers on the index, Dangote cement, the most capitalised company on the NSE shed the most in market value losing a whooping N403.488 billion, a decline by 12 percent in stock price.
BusinessDay’s analysis also showed that market rout eroded the most 10 companies to the tune of N2.07 trillion. Among these companies were financial institution with accounted of 50 percent. Others include fast-moving consumer goods companies, industrial companies, and oil & gas companies.
The financial institutions were worst hit losing a total of -N847 billion accounting for 41 percent of the total value lost among the ten companies, while the consumer goods followed closely loosing N735 billion accounting for 35 percent of the loss.
Industrial goods companies received less blows as its loss constituted 19 percent of total value at N403 billion while the oil and gas companies were least affected with 4 percent of the loss accounting for N88 billion.
While the equity market especially financial institutions are largely dominated by foreign investors due to the belief that these companies guarantee stable and higher returns compared to other companies, one major factor that rules the market is investor’s sentiment which weighed on banks’ performances.
Coupled with the sentiment factor is the recently announced increase of lender’s loan to deposit ratio (LDR) to 60 percent by the apex bank which saw investors sell off their stocks on the believe the move will hurt the banks’ books.
Furthermore, analysis of the entire NSE 30 index further showed that 80 percent of total listed companies in the index underperformed the ASI eroding more than 12 percent of investors’ worth on the exchange.
Occupying the top 10 spots amongst companies that returned negatively to investors include International Breweries (-62%), ETI (-55%), PZ (-55%), Total (-48%), Nigeria breweries (-41%), Forte Oil (-41%), Flourmill (-40%), FBHN (-37%), Dangote sugar (-37%), and Okomu Oil (-36%).
The list was largely dominated however by consumer goods which accounted for 50 percent of the top 10 entries.
Consumer goods firms during the period were largely affected by general negative market sentiment coupled with the move of the fiscal and monetary authorities to restrict FX on food importation which investors perceived the timing as inappropriate giving challenges currently faced in the industry.
Some companies on the index however were able to weather the storms still returning value to their investors despite rout.
These companies include Custodian, Wapco, Union Bank, Sterling Bank and Trancorp gaining cumulatively N108.7 billion in market cap.
However, these companies’ gains were not sufficient enough to by the index up as the NSE30 index closed on Wednesday at a YTD performance of -24.06 percent.
DAVID IBIDAPO & GBEMI FAMINU
