Equities Slump To 37 Months Low Amidst Crude Oil Decline

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Nigerian equities slumped below its three-year low yesterday as global decline in crude oil price exacerbated concerns over Nigeria’s fiscal and macroeconomic outlook. After a loss of 1.08 per cent or N104 billion on Tuesday, quoted equities dropped by 1.92 per cent or N 181 billion on Wednesday as investors reacted sharply to similar decline in crude oil price The Nation report

The average decline at the Nigerian stock market yesterday correlated with 1.95 per cent decline in the Brent Crude Oil price to $43 per barrel. Crude oil incomes account for about 85 per cent of Nigeria’s national revenue. Nigeria’s N6 trillion budget for 2016 was benchmarked against crude oil price of $38 per barrel.

“OPEC’s decision to abandon its production quota which has led to a further decline in oil prices, seems to have fuelled the renewed sell pressure on the Nigerian Bourse,” said Afrinvest Securities- a Lagos-based dealer at the Nigerian Stock Exchange (NSE).

Aggregate market value of all quoted equities on the NSE slumped from N9.466 trillion to close at N9.285 trillion, representing a loss of N181 billion. The All Share Index (ASI)-the value-based common index that tracks prices of all quoted companies, also dipped by 1.92 per cent from 27,533.03 points to close at 27,004.50 points, its lowest point in the past 37 months.

The successive decline built up the negative average year-to-date return at the stock market to -22.08 per cent. With 24 losers to 15 gainers, widespread losses across the sectors and losses within the highly capitalised stocks group. The NSE Industrial Goods Index dropped by 2.6 per cent. The NSE Consumer Goods Index declined by 0.6 per cent while the NSE Insurance Index slipped by 0.3 per cent. However, the NSE Oil & Gas Index rose by 0.9 per cent.

Dangote Cement, the most capitalised stock at the stock market, recorded the highest loss of N8.53 to close at N162.19. Guinness Nigeria followed with a loss of N1.90 to close at N123. Nigerian Breweries, the second most capitalised stock at the market, lost 99 kobo to close at N112.01. Cadbury Nigeria declined by 98 kobo to close at N18.68. GlaxoSmithKline Consumer Nigeria lost 66 kobo to close at N36. PZ Cussons Nigeria dipped by 50 kobo to close at N26.50. Guaranty Trust Bank lost 37 kobo to close at N18.53. Zenith Bank declined by 35 kobo to close at N14 while Ecobank Transnational Incorporated and Fidson Healthcare lost 14 kobo each to close at N16 and N2.69 respectively.

Afrinvest Securities stated that the downtrend reflected the waning investors’ appetites consequent on the ongoing decline in crude oil prices that has sparked concerns on Nigeria’s fiscal viability and macroeconomic fundamentals.

“As outlook for the oil market remains bearish, strong policy responses from fiscal and monetary mangers to adjust to the reality of a lower oil revenue environment are medium term factors that could lead to an improvement in sentiments. In the interim, our short term outlook for the market remains bearish although we anticipate that bargain hunting might result in a mild uptrend in the trading session ahead,” analysts at Afrinvest Securities stated.

Total turnover stood at 240.8 million shares valued at N2.41 billion in 3,073 deals. Zenith Bank was the most active stock with a turnover of 64.3 million shares worth N856.04 million in 590 deals.

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