The values of shares held by investors in the various companies quoted on the Nigerian Stock Exchange (NSE) depreciated by N141 billion in the month of August.
Stock market analysts noted that the Nigerian equity market ended the month of August on a negative note as unimpressive half year, 2016 earnings releases as well as attractive yields in the fixed income market further dampened investors’ appetite for equities.
Review of the equity market performance under the period showed that market capitalisation dropped by N141 billion from N9.620 trillion it opened in August to close at N9.479 trillion at the end of August 2016. In the same vein, the All Share Index, opened in August at 28,009.93 basis points, depreciated by 1.47 per cent or 410.90 basis points to close the month under review at 27,599.03 basis points.
NSE market capitalisation is the total value of companies quoted on the exchange. It is measured by the stock prices times the number of shares issued by all companies quoted on the exchange, while the All Share Index is the total market (broad-base) index, reflecting the total movement of all prices of shares quoted on the NSE.
Also investors traded N6.376 billion of shares valued at N58.856 billion in August, while market breadth was negative for the month, with 20 gainers versus 59 losers.
The president, Association of Stockbroking Houses of Nigeria (ASHON), Mr. Emeka Madubuike, said the persisted pressure on foreign exchange market and increase in interest rate from 12 per cent to 14 per cent impacted negatively on the equities market in August.
Reacting on the equities market performance expectation in September, he said, “Since the money market activities were depreciating, we are expecting a marginal decline in investment within the month because of the state of foreign exchange market. I do not foresee much investment due to decrease borrowing from banks as a result of the current economic recession in the country.
“We may not see much decline in stock prices but there will be low investors patronage compared to what the market closed at the previous month.
“For the third quarter results that will be released in October and those companies that are yet to release their second quarter results, we expect this to be impacted by the weak macroeconomic environment,” he added.
The managing director of Highcap Securities Limited, Mr. David Adnori said attractive yields in the fixed income market would continue to impact on the value of stocks in the month of September.
“Rather than invest in stocks, some investors are more likely going to invest in risk free treasury bills that offer safer and stronger rate of returns over risky equities,” he said.