Despite the thin trading recorded on the equity market following sustained skeletal operations through the remote trading facility of the Nigerian Stock Exchange (NSE) arising from the nationwide strike declared by the labour leaders and coalition of civil societies, the market performance indices closed the week in the green.
Although profitable transactions permeated market activities in the week as ASI closed northwards amid skeletal trading activities witnessed on the local bourse throughout the week as the nationwide strike? enters its fifth day on Friday, market analysts are worried that the strike might jeopardise the much-anticipated recovery of the Nigerian stock market.
Investment analysts said the strike might adversely impact on the inflow of foreign direct and portfolio investments, citing global anxieties over socio-political uncertainties.
Meanwhile, the NSE All-Share Index? appreciated? by? 115.67? points? or? 0.6 per cent?? to close on Friday at? 20,840.97, while the market capitalisation of the equities? increased to N6.567 trillion.
Also,? the NSE-30? Index? appreciated by? 2.96? points or? 0.3% per cent to close at? 935.45. At the preceding week,? the? NSE-ASI depreciated by 0.02 per cent, while the NSE-30 Index appreciated by 0.9 per cent.
One of the? four sectorial indices appreciated during the week compared to two? that appreciated during the preceding week. The NSE Consumer Goods Index (Formerly the NSE Food/Beverage Index) appreciated by 2.60 points or 0.2 per cent per cent to close at 1,715.50.
However, the NSE Banking Index depreciated by 3.01 points or 1.1 per cent to close at 268.42. The NSE Oil/Gas Index depreciated by 1.89 points or 0.8 per cent to close at 228.34, and the NSE Insurance Index depreciated by 0.10 points or 0.1 per cent to close at 128.57.
Consequently 14 equities? appreciated in price during the week,? lower? than the? 30 of the preceding week. As in the preceding week, Dangote Cement Plc? led on the gainers’ table with a gain of N3.51 or 3.1 per cent to close at N116.51 per share, while Flour Mills of Nigeria Plc followed with a gain of N1.00 or 1.6 per cent to close at N64.00 per share, among other gainers.
Meanwhile, 13 stocks depreciated in price, lower than the 25 of? the? preceding week. Guinness Nigeria Plc led on the price losers’ table, dropping by N2.56 or (1.1 per cent) to close at N235.00 per share, while Oando Plc? followed with a loss of N0.71 or? (3.3 per cent)? to close at N21.00 per share, among other losers.
A turnover of 308.803 million shares worth N3.64 billion in 1,217 deals was recorded during the week, in contrast to a total of 1.05 billion shares valued at N5.5 billion exchanged at the preceding week in 10,037 deals.
The Financial Services sector accounted for 280.02 million shares valued at N1.66 billion traded in 741 deals.
The? Banking? subsector of the? Financial Services? sector was the most active during the week (measured by turnover volume); with? 273.32? million shares worth N1.653? billion exchanged by investors in 695 deals.
Volume in the Banking subsector was largely driven by activity in the shares of Diamond Bank Plc, Ecobank Transnational? Incorporated and Zenith Bank Plc.
Trading in the shares of the? three banks? accounted? for? 187 million? shares, representing? 68.41 per cent,? 66.8 per cent? and 60.55 per cent of the turnover recorded by the subsector, sector and total turnover for the week, respectively.
The Food Products subsector of the Consumer Goods sector, boosted by activity in the shares of Dangote Sugar Refinery Plc, followed on the week’s activity chart with a subsector turnover of 13.52 million shares valued at N99.052 million traded in 62 deals.
The Consumer Goods sector accounted for 22.94 million shares valued at N1.812 billion traded in 287 deals.? At the preceding week, the Beverages – Brewers/Distillers subsector led on the activity chart and was followed by the Banking subsector, both from the Financial Services sector.
There were no transactions executed through the stock market in the Federal Government Development Stocks, State Government Bonds and Industrial Loans/Preference Stocks sectors.
The N35 billion 14 per cent Medium Term Notes 2018 Series 2 in favour of United Bank for Africa Plc was admitted on the Daily Official List on Thursday,? January 5, 2012.
This is part of the N400 billion Medium Term Note Programme. By this action, the number of? listed corporate bonds and securities increased to 13 and 251, respectively.
Though some financial experts have expressed fear that if the strike was not called off soon, the threat to shut down oil exports might escalate the adverse impact on the economy, raising concerns over the realisation of the 2012 budget, which already has built in deficits of more than N1.1 trillion.
They also expressed concern that the financial services, manufacturing, services, agriculture and retail sectors were? expected to bear more of the burdens of the general strike as average loss per day at the Nigerian interbank market was estimated at more than N83 billion.
However, the Managing Director Lambeth Trust & Investment Company Limited, Mr. David Adonri ,said the removal of oil subsidy was a right step towards making the private sector, known for its efficiency, to truly become the engine for productive growth in the economy.?
“The policy measure is vital in closing the financing gap in government’s expenditure which has resulted in huge borrowing to finance budget deficits. Excessive borrowing by government at any cost is the main factor responsible for crowding out funds from the equities market and the real sector of the economy. This has caused the equities market to under-perform, hence denying the productive sector the type of critical capital required to generate productive employment and create wealth for the economy. Consequently, this policy is expected to reduce propensity for government to borrow, thus facilitating decline of interest rate which would lead to competitiveness of equities as viable investment outlet,” Adonri said.
He noted that structural reforms like deregulation were always met with fierce resistance.
According to him:“This happened in India when Prime Minister Narasima Rao commenced the process of deregulating the economy. When the French and British governments introduced austerity measures recently, there were widespread riots but they pressed home the reforms which eventually saved the countries from embarrassment of the debt crisis currently sweeping across Europe.
“ This is the time for President Jonathan to demonstrate courage and not succumb to populist sentiments. To prevent his administration from ending as a failure like several others in the past, he should continue with iron determination to push the deregulation of the Nigerian economy to its logical conclusion within the remaining period of his tenure.
“ If President Obasanjo had not irreversibly deregulated telecommunications during his tenure, late President Yar’adua would have truncated it, thus denying the economy the benefits we now enjoy. Enough is enough. The era of subsidising consumption must end, giving way to a new future in which production is subsidised for generation of productive employment.”
But speaking on the contrary, the President of Progressive Shareholders Association, Mr. Boniface Okezie, reacting to the removal of the subsidy said it was ill timed and capable of further depleting the prices of shares in the capital market.
Okezie noted that the government should have waited for at least the second half of this year before coming up with what he described as ‘an ill-fated policy’ so as to enable a bit stability in the fledging capital market which is currently recovering slowly.
“The removal will affect the prices of shares in the capital market because it is when discerning investors make some savings before they think of taking position on the shares.
“Since the removal has affected the prices of things in the country and there is no corresponding increase in income, it will be very difficult for investors to make long term investments. So the capital market is already down and this policy is going to further polarise the market,” he said.