Stock traders on Customs Street have further cut their bets on equities as they wait on the apex bank to make good its promise of a clear announcement around a more flexible foreign exchange (FX) policy.
Some investors on Monday routed sell mandates to the Nigerian Stock Exchange (NSE), which bulged the supply side at the bourse with attendant impact on stocks prices.
BusinessDay check at the local bourse on Monday shows stocks value depleted further by N12 billion.
In the past week, Nigerian equities swung lower to lock-in, a weekly loss as the market reversed prior gains, shedding N435 billion.
“The Nigerian equity market traded mixed with a bearish bias, as continued delay on the details of the proposed foreign exchange (FX) regime reignited a weak market sentiment. We expect mixed trading to persist in tomorrow (today) session as investors continue to await directions on the new FX regime,” research analysts at Lagos-based Vetiva Capital Management said Monday in an emailed comment to BusinessDay.
In a move seen by most analysts to hedge against further loss, equity investors took sale decisions on 25 stocks led by Total Nigeria plc, Guinness Nigeria plc, and Julius Berger plc. Total led the laggard after losing N7.45; Guinness lost N2.95; while Julius Berger share price depleted by 90 kobo.
The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by 0.13 percent, while the Year-to-Date (ytd) return stood at -3.64 percent. The All Share Index (ASI) closed at 27,599.48 points against the preceding day close of 27,634.48 points, while market capitalisation closed at N9.479 trillion against preceding day close of N9.491 trillion.
“We think current uncertainty rocking the equities market will linger as investors continue to wait on the Apex bank to make good its promise of a clear announcement around a more flexible FX policy. Barring such an announcement, we expect the bears to dominate proceedings which will likely see the equities market end the week lower,” said analysts at United Capital plc.
Central bank Governor Godwin Emefiele has fixed the naira at 197-199 per dollar since March 2015, even as other oil exporters from Angola to Kazakhstan have let their currencies drop. Forward contracts suggest it will fall 39 percent to 277 in three months and to 324 in a year.
Analysts say investors will be awaiting any clarity from finance Minister, Kemi Adeosun and other officials that will meet bond investors at London’s five-star Corinthia Hotel on Tuesday.
The government has said it plans to raise about $10 billion of debt in 2016, half of it externally, to plug a fiscal deficit estimated at N2.2 trillion, or 2.1 percent of gross domestic product.
Bond investors blame Nigeria’s rigid foreign-exchange regime for draining reserves, which have fallen to a more than 10-year low, and hindering the economy, according to Bank of America Merrill Lynch.
“Without some kind of exchange-rate reform, we doubt the market would look favourably upon a Eurobond,” said Alan Cameron, a London-based economist at Exotix Partners LLP.
Brent crude oil prices rose to a fresh seven-month high on Monday, lifted by a fall in the dollar that could spur demand, just as attacks on Nigerian oil infrastructure tighten supplies, but signs of recovering U.S. output capped gains.
Brent crude futures were up 97 cents at $50.61 a barrel at 1244 GMT after hitting a high of $50.78. US. Crude futures were up $1.02 cents at $49.64 a barrel.
At the Nigerian bourse, the volume of stocks traded decreased by 41.62percent from 243.8million to 142.3million, while the total value of stocks traded decreased by 41.19percent from N2.43billion to N1.42billion in 3,695 deals.
The Financial Services sector led yesterday’s activity chart with 101.8million shares exchanged for N430million; consumer goods followed with 13.748 million shares traded for N837 million.
The equity market last week was driven by speculations amidst fundamental factors such as economic/earnings growth prospects, policy actions, volatility in currency and commodity prices, according to research analyst, Dunn Loren Merrifield, who noted that if the current profit taking activities driving the market continues, “the equity market may continue to ride in the bear’s zone, this week.”
IHEANYI NWACHUKWU
