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Qtr 1: NSE Equity Investors Worth Depreciate By N779.95bn

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IMAGE: Trading session in NSE »

Story:  Olushola Bello And Aronke Olayiwola

Investors’ net worth on the Nigerian Stock Exchange (NSE) depreciated by N779.95 billion in first quarter, 2014.

The NSE-All Share Index which is the gauge for measuring aggregate growth in the capital market shed 2,581.18 from 41,329.19 points between  January 2, 2014 to 41,329.19 points and March 31, 2014, depreciated by 6.25 per cent.

Specifically, the market capitalisation of equities went down by N779.95 trillion in the first quarter at N12.45 trillion from N 13.23 trillion at which it opened trading for the year.

The sectoral indices review revealed that they all closed the first quarter on a negative trend; the NSE- Banking Index led the sectoral indices with a loss of 15.20 per cent, followed by Oil and Gas losing 15.20 per cent and Consumer Goods with 12.11 per cent loss respectively.

NSE- Insurance dipped by 11.28 per cent, Islamic Lotus depreciated by 3.59 per cent and NSE ASEM went down by 1.03 per cent returns but NSE- Industrial Index went up by 1.59 per cent. Some stakeholders attributed the decline in the stock market indicators in the first quarter to the tapering of quantitative easing by United States Feds, further tightening of monetary policy and backlash from Sanusi’s suspension .

According to the managing director, APT Securities & Funds Limited, Alhaji Kasimu Garba Kurfi, from all indication the market performance for the first quarter is far below expectation, considering the growth the market had in 2013. He said that despite the favourable outlook for the market at the beginning of the year, there has been a considerable pressure on the market since the beginning of the year.

He emphasised that the outcome of the MPC meeting, which resolved to increase the Cash Reserve Ratio, CRR, on public sector funds to 75 per cent from 50 per cent had an effect on the banking sector and the suspension of the Governor of the Central Bank also contributed to the dip in equities prices in the market in the first quarter.

The managing director/CEO, Cowry Asset Management Ltd, Mr Johnson Chukwu, said the Nigerian capital market has been largely bearish in the first quarter of the year, attributing it to factors both within and outside the Nigerian economy. “One of these factors is Nigerian’s declining foreign reserves, which is currently below $38 billion and the attendant heightening of prospects for Naira devaluation.”

Speaking on the outlook for the market in the second quarter, Chukwu stressed that the bearish run would likely continue in the second quarter as some of the factors that impeded performance in the first are yet to ebb. “The two critical factors that contributed to the bearish equities market in first quarter 2014 seem to be worsening. While Nigeria’s foreign reserves is recording accelerated rate of decline, the US Federal Reserve is expected to further reduce the monthly asset purchases by $10 billion to $55 billion at their March 2014 meeting.”

Consequently, he said that the Nigerian equities are likely to record further price declines as local fund managers particularly the Pension Fund Administrators (PFAs), who should have filled the gap created by the exit of foreign portfolio investors seem to have stepped to the sidelines waiting to see how low the market can get or hoping to buy when stock prices drop to their support levels.

The managing director of Lambeth Securities Ltd, Mr David Adonri, said that in second quarter the Market is expected to react to corporate full year disclosures. There are indications that the Market could firm up due to encouraging full year results declared so far by quoted companies.

Article Credit: Leadership newspaper

Updated 5 Years ago

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