The Nigerian stock market lost about N980billion in just two trading days into this week, fueling concerns over possible recovery in the near term. This historic loss seen within just two days was caused by additional N656billion loss on Tuesday March 10. This negative on Custom Street comes despite fading sense of panic over recent oil price dip.
The Nigerian Stock Exchange (NSE) All Share Index (ASI) depreciated by 4.91percent to close at 24,388.66 points as against 2.41percent depreciation recorded the preceding day. The market’s Year-to-Date (YtD) returns currently stands at -9.14percent.
“There is a whole lot of confusing presently. Everybody is looking for safe haven. Market has lost over 2percent this morning. Everybody is worried over what the future holds. The possibility of recouping the loss is very remote. Though I believe there is still hope for us here in Nigeria,” said a dealing member on the Nigerian Stock Exchange (NSE).
Oil prices jumped by around 4 per cent on Tuesday after the biggest one-day rout in nearly 30 years, as investors eyed the possibility of economic stimulus, although a looming price war weighed on sentiment.
US President Donald Trump on Monday said he will be taking “major” steps to gird the US economy against the impact of the spreading coronavirus outbreak, while Japan’s government plans to spend more than $4 billion in a second package of steps to cope with the virus.
Brent crude futures were up $1.44, or around 4 per cent, to $35.80 a barrel by 0903 GMT, after hitting a session high of $37.38 a barrel. West Texas Intermediate (WTI) crude gained $1.52, or around 5 per cent, to $32.65 a barrel, after hitting a high of $33.73.
Both benchmarks had plunged 25 percent on Monday, dropping to their lowest levels since February 2016 and recording their biggest one-day percentage declines since January 17, 1991, when oil prices fell at the outset of the first Gulf War.
As the oil price panic seemingly fades, bargain hunters on Custom Street, Lagos Nigeria remained risk averse as they failed to consider taking advantage of stocks new low. FBN Quest analysts had expected the stock market to witness this same negative sentiment in Tuesday’s session.
As at close of trading by 2:30pm Nigerian time on Tuesday March 10, stocks lost N656billion. The value of listed stocks stood at a new low of N12.709trillion as against an open level of N13.428trillion. This poor performance comes amid impressive dividend yields that attract investors ahead of their qualification and closure dates.
FDC research analyst, Temitope Olugbile said on Tuesday that the oil market remains tricky. “Though we have seen slight recovery but the price war remains. For now, oil market remains very uncertain and we watch and see what happens in the near future”, she said. The future price of oil according to her remains around $40 per barrel.
Stock markets in Europe opened slightly higher following Monday’s plunge, when shares saw the biggest falls since the 2008 financial crisis. London’s FTSE 100 share index opened up 1percent after having sunk 7.7percent in the previous session. They raised bet as their policymakers continue to think of new measures to soften the economic blow from the global coronavirus outbreak.
MTN N recorded the highest dip, from N115 to N103.5, down by N11.5 or 10percent, while Nigerian Breweries Plc followed after moving from N36.75 to N33.1, losing N3.65 or 9.93percent. Banking stocks remain actively traded on the Bourse.
The Nigerian equities market on Monday recorded its largest dip in a single session this year, as the All Share Index (ASI) tumbled by 2.40percent at the close of the first trading session of the week.
The weakness witnessed across the domestic and indeed all major global equities markets was underpinned by investors reaction to Saudi Arabia and Russia failure to agree on how to respond to plunging crude oil demand on the back of the Covid-19 outbreak.
Iheanyi Nwachukwu
