Investors’ net worth on the Nigerian Stock Exchange dropped by N581bn in November, amid ‘sell pressure’ ahead of the 2019 general elections and Yuletide celebrations.
Data obtained from the exchange showed that the market capitalisation shed N581bn or 4.90 per cent to close at N11.271trn against N11.852trn achieved in October.
Also, the All-Share Index which opened at 32,466.27 shed 1,592.1 points to close at 30,874.17 due to huge losses posted during the period.
A breakdown of the price activity chart during the review period showed that Diamond emerged worst performing stock in percentage terms, dropping by 53.24 per cent to close at 65k against N1.39 opening price.
Eterna Oil came second having dropped by 30.58 per cent to close at N4.20, while Cement Company of Northern Nigeria shed 27.86 per cent to close at N18 per share.
Other top losers’ were Ikeja Hotel, Lafarge Africa, Niger Insurance, C & I Leasing, Union Diagnostic, NEM Insurance and AG Leventis.
Conversely, Continental Reinsurance emerged the best performing stock in percentage terms, growing by 35.14 per cent to close at N2 per share on the strength of its expansion drive and improvement in earnings.
It was trailed by GSK with 17.89 per cent to close at N14.50, while MC Nicholas inched 14.68 per cent to close at 47k per share.
Other top gainers were May & Baker, CAP, Beta Glass, NAHCO, Nestle, Presco and AXA Mansard Insurance.
Commenting on the performance of the market during the period, Mr Sola Oni, a chartered stockbroker and Chief Executive Officer, Sofunix Investment and Communications, attributed the continuous slide to a combination of factors.
Oni said many investors were apprehensive of the likely breakdown of law and order during general election in February next year.
He said the fear was prompted by unguarded comments of the political class, adding that many investors wanted to reduce their losses by selling off now.
Oni added that some investors were also dumping their shares to prepare for Christmas celebrations and payment of school fees in the New Year.
“The stock market is a reflection of the economy and indeed a barometer that gauges economic mood.
“The bearish trend signals that all is not well with Nigeria’s economy. However, the market operates in cycles and the fact that a company’s share price drops does not necessarily mean that it has gone under.
“It only lost the value of some shares and can bounce back once there is positive information.
“This is a good time to buy shares as prices of many blue chip companies are trading below intrinsic values and they have strong potential to bounce back,” he said.
Publicity Secretary, Independent Shareholders Association of Nigeria, Mr Moses Igbrude, said the downward trend was due to the upcoming elections.
Igbrude said many foreign investors had moved away from the market because of the instability in the system.
“Virtually all the companies listed on the exchange today are undervalued.
“My advice to Nigerians who have the resources is to invest now that the market is down pending when elections are over Nigeria will remain no matter what happens,” he said.
The Chief Operating Officer, InvestData Ltd., Mr. Ambrose Omordion, attributed Diamond Bank’s loss to the lingering crisis and reactions to its rumoured acquisition which was denied by the bank.
Omordion said the crisis of confidence was triggered by the way it’s Chairman, Mr. Oluseyi Bickersteth, resigned along with three other non-exclusive directors.
He added that weak earnings power that led to non-payment of dividends for some time now and high non-performing loans contributed to the drop of the bank’s share during the period.
Omordion, however, said the bank’s acquisition of national banking licence would propel the turnaround of its fortunes.