As if things could not get worse for Nigerian investors, the three largest companies on the Nigerian Stock Exchange (NSE) have lost a total of N756 billion (the equivalent of the market cap of all tier 2 and 3 banks excluding Stanbic IBTC).
The three largest companies on the NSE which are the only members of the elite trillion-naira market cap club are Dangote Cement, MTN Nigeria and Nestle Nigeria. These 3 companies account for 52.09 percent of the total market capitalization and together they have a market of around N6.85 trillion which is N756 billion less than their position of N7.60 trillion one month ago.
The newest member on the NSE and Nigeria’s largest telecommunications provider, MTN Nigeria, accounted for the biggest loss among the three juggernauts as their investors took a hit of N386.73 billion in the space of just one month. MTNN which was initially a high flyer after its listing saw a deep sell off after announcement that the EFCC was investigating a possible share price manipulation. The share price spiraled from a high N149 and closed at N130 at market close on Friday.
Dangote Cement, Nigeria’s largest manufacturer, also suffered a sizeable loss in tune of N357.85 billion since the 23rd of May showing it is not so rosy at the top for Nigeria’s biggest companies. Analyst opine that the selloff is caused by the low probability of Dangote being able to match the same dividend payments declared for 2018.
Nigeria’s largest beverage company, Nestle Nigeria, contributed a meager 2 percent to the total loss of the three giants. The company recorded a loss of N11.65 billion as the price fell from N1.365 to N1,350 in one month amidst general market sell off.
Dangote Cement, MTN Nigeria and Nestle Nigeria had an average month-to-date decline of 8.02 percent. The performance recorded for Dangote Cement, MTNN and Nestle was 10.24 percent, 12.75 percent and 1.08 percent respectively. As a result, the broad market is down 1,626 index points which represents a 5.17 percent decline in the same time period.
Investors who are patiently waiting for the bearish market sentiment to end could see an opportunity as the half-year earnings season is a month away. These biggest companies have been forecasted to continue the stellar performance and enforce their strong fundamentals regardless of the opinions of the opinions of investors selling off.
Ifeanyi John
