equities market dropped by 4.66 per cent in the first half (H1) of the year, following 2019 election, policy implementation slowdown and sell-offs by foreign investors.
However, the market capitalisation of listed companies rose by N1.485 trillion as a result of the listing of MTN Nigeria and Skyway Aviation Handling Company Limited (SAHCOL) during the period under review.
Transactions in the market for H1 showed that the All Share Index (ASI), which mirrors the performance of the market in terms of equity price movement closed lower at 29,966.87 points on June 28, 2019, compared to 31,430.50 points at the beginning of the year, thus representing 4.66 percent loss.
Meanwhile, the market capitalisation, which represents the total value of investors’ assets was up by N1.485 trillion to N13.206 trillion on June 28, 2019 from N11.721 trillion at the beginning of the year.
Performance across the major sectoral indices was negative except for NSE Premium Board index which rose by 9.17 per cent in H1. On the other hand, Consumer Goods Index declined the most by 16.89 per cent. Oil and Gas index followed with a decline of 16.21 per cent, while NSE Industrial Goods index depreciated by 12.12 per cent.
Also, NSE Lotus 11, NSE 30, Banking and Insurance indices depreciated by 12.03 per cent, 11.39 per cent, 8.04 per cent and 2.16 per cent, respectively.
Capital market analysts said that the market expects the announcement of the government’s new cabinet, economic team and a blueprint from the fiscal authority to kick off implementation of the 2019 budget.
In May, President Muhammadu Buhari signed the 2019 appropriation bill into law and the President was inaugurated for a second term in office. The President also inaugurated the board of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) to formulate policies and strategies to boost revenue collection for efficient allocation to the various tiers of government.
The current administration has among major themes of its development agenda, diversification of the economy from crude oil. This has resulted in the encouragement given to non-oil exports, as part of the Central Bank of Nigeria (CBN) placed a ban on importers of 42 items from accessing its official foreign exchange window.
Analysts noted that this is the time the fiscal and monetary authorities should work together to actualise the much talked about double-digit growth potential of Nigeria’s economy.
The managing director of Highcap Securities, Mr. David Adonri said the build up to 2019 general election had negative effect on the capital market, stressing that post-election activities of the current administration worsen the situation, coupled with weak economy indicators.
He noted that the listing of Airtel Africa Plc might boost the capital market.
According to Adonri, let’s hope the listing of Airtel Nigeria will lift the capital market up. The equities market was performing worst. It was on a decline of about 10 per cent until MTN Nigeria got listed which impacted positively on market performance.
He said: “The reality on ground, in line with current economy does not mean half year results by listed companies will be impressive which is expected to impressive equities market growth this year.”
Speaking, the managing director/chief executive officer, APT Securities Limited, Mr. Garuba Kurfi, attributed equities market weak performance to election year, budget delay, absence of fiscal policy, among others.
According to him, election year is such year the equities market experience low performance of the index.
“The non-passing of the 2019 budget on time by the National Assembly, as it is tagged to capital expenditures also contributed to the poor performance of the equities market.”
He said listing of MTN Nigeria reduced investors lost in the equities market as the All Share Index lost over 10 per cent before the telecommunication company got listed in May.
He added that, Airtel Africa listing by this month, and announcement of ministers are expected to boost the equities market in the second half of the year.
“The listing of Airtel may push the ASI index into positive or recovery”, he said
Besides, the release of federal government ministerial list by July especially if involve Economic that performs better will help the capital markets
On the market outlook, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion stated that as bargain hunters are likely to hit the market any moment from now, while discerning investors are taking advantage of low valuation to position ahead of March year-end numbers and second half interim dividend stocks.