The nation’s benchmark stock index fell the most in six weeks on Wednesday, as earnings from some of the biggest companies proved disappointing and some investors opted to move money out of equities.
The All Share Index of the Nigerian Stock Exchange dropped by 1.1 per cent, the most since June 21, while the market capitalisation of listed equities fell to ₦13.263 trillion from ₦13.469 trillion on Tuesday.
Royal Exchange Plc declined by 10 per cent to be the worst performer. Dangote Cement Plc, the largest share by market value, fell by 1.3 per cent, contributing the second-most index points to the benchmark’s retreat. Nigerian Breweries Plc retreated by 1.9 per cent.
The Chief Executive, Proshare Nigeria Limited, Olufemi Awoyemi, was quoted by Bloomberg as saying that some companies had cut their earnings forecasts following weak half-year results.
“Some investors want to play safe and are moving to the fixed-income market,” he added.
Rising political tension was also said to have played a role in Wednesday’s trading.
President Muhammadu Buhari has lost a key supporter in his northern stronghold, a day after the Senate President, Bukola Saraki, walked out of the ruling party amid a wave of defections to a swelling opposition movement ahead of elections in February next year.
The Governor of Sokoto State, Aminu Tambuwal, left the All Progressives Congress to join the Peoples Democratic Party, which ruled Nigeria for 16 years until Buhari’s 2015 win.
Earnings for Dangote Cement and Nigerian Breweries had not been “particularly positive” and the two companies account for almost half of the market, said an economist at Vetiva Capital Management Limited, Michael Famoroti.
According to him, the wider political and economic situation is expected “to drive the medium-term market performance”.