Nigerian equities closed the first quarter with net capital depreciation of N49 billion, a sharp reversal from the bullish trading that saw equities with net capital gain of N1.38 trillion in first quarter of 2018
All major indices at the Nigerian equities market closed weekend negative, despite the onset of earnings season that had seen most active companies declaring steady earnings and dividends.
Nigeria’s sovereign equities index-the All Share Index (ASI) of the Nigerian Stock Exchange (NSE), indicated an average year-to-date return of -1.24 per cent for the first quarter, implying an adjusted net depreciation of N145 billion during the three-month period ended March 31, 2019. The aggregate market value of all quoted equities on the NSE, however, dropped by N49 billion, supported by new supplementary listings during the period.
Fundamentally, the ASI and market value move simultaneously at the same value and in the same direction. However, addition and deduction of shares-through new listings and delisting, usually create a temporary disparity between the two indices. When the impact of a new listing is fully absorbed by the market, the indices will converge and continue to trend on the same level.
The performance in the first quarter of this year further exacerbated the decline at the Nigerian equities market, which had suffered average decline of 17.81 per cent or about N1.89 trillion in 2018.
With the decline in first quarter, average decline in investors’ portfolio over the past 15 months now stand at 18.83 per cent, with net decline of N1.937 trillion in total market value of quoted equities. Meanwhile, Nigerian equities had recorded net capital gain of N4.36 trillion or average gain of 42.30 per cent in 2017, implying considerable upside for investors despite the decline in the past 15 months.
The ASI closed weekend at 31,041.42 points as against its 2019’s opening index of 31,430.50 points. It had opened 2018 at 38,243.19 points. Aggregate market value of all quoted equities at the NSE, which opened this year at N11.721 trillion, closed weekend at N11.672 trillion. It had opened 2018 at N13.609 trillion.
Month-on-month analysis showed that the market started the year with a loss in January, rallied to appreciable recovery in February and relapsed into negative again in March. Nigerian equities lost N326 billion in January 2019, with average decline of 1.82 per cent. The ASI and market value of equities had closed January 2019 at 30,557.20 and N11.395 trillion respectively.
In February 2019, investors in Nigerian equities netted N433 billion in capital gains as the stock market staged a major recovery. Average return for the month stood at 3.80 per cent. The ASI and market value of quoted equities had closed February higher at 31,718.70 points and N11.828 trillion respectively.
The market rounded off the first quarter with a net loss of N156 billion and average decline of 2.135 per cent in March 2019.
Most analysts agreed that heightened political risk was a major factor that had adversely impacted the equities market since 2018.
According to analysts, the impact of intense political activities, which had started earlier than expected, and the tenor of the often rancorous campaigns dampened investors’ enthusiasm. Global markets also contributed to the decline, especially improving yields in advanced economies. Foreign portfolio investors accounted for some half of transactions in the Nigerian market.