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Investors’ apathy deflates shares’ value by N146bn in November

By Michael Eboh

Value of shares  on the Nigerian Stock Exchange (NSE) depreciated by N145.88 billion in November owing to investors’ apathy fueled by uncertainties in the banking and manufacturing segments.

Specifically, equities’ value, represented by the market capitalisation dropped by 2.84 per cent from N5.143 trillion at which it opened the month to close at N4.998 trillion.

The All-share index, another major performance indicator for listed equities  also dipped by 3.64 per cent, shedding 794.4 basis points to close the month at 21,010.29 points from 21,804.69 points.

The decline in the value of listed equities was occasioned by a number of factors including investors’ apathy over developments in the capital market.

Investors’ apathy arose out of uncertainties beclouding the capital market, especially with the dilemma being faced by commercial banks and manufacturing concerns listed on the NSE.

The Central Bank of Nigeria CBN, after  wielding the big stick on eight  banks, removing their managing directors and executive directors, ordered the banks to make full provision for all their bad debts and toxic assets.

This has led to a number of the banks on the NSE declaring not-too-impressive financial statements with few of them announcing significant reductions in their profitabilty while most of them announced huge loses.

The crisis in the banking sector spilled over to  other sectors of the economy, especially the real sector, going by the fact that a number of manufacturing and business concerns are exposed to the banks in one way or the other. This is because the banks are the major financier and provider of short to medium term funding for
the real sector.

With the crisis in the banking sector, especially with the release of the debtors’ list by the CBN, majority of the banks began to recall their loans, even as Economic and Financial Crimes Commission (EFCC) hounded  banks’ debtors.

Manufacturing firms were forced to repay their loans outside already laid out repayment structure and this really affected their operations.

Also, the depreciation  of the nation’s currency in the first quarter of the year affected majority of the companies negatively, as they have to pay for imports with much more money than projected. This affected their income negatively and brought about a significant rise in their expenditure.

In the financial statement of a number of the firms, various exceptional items were introduced running into several tens, hundreds and billions of naira.

According to the NSE’s report for the month of November, “The harsh operating environment continued to hamper the performance of most companies and the gloomy economic outlook so far in 2009 affected the quarterly results of some quoted companies. Consequently, stock market indicators recorded downward movements during November 2009.”

The report noted that the stock market recorded a monthly negative return of 5.32 per cent on a dividend-adjusted basis, a reversal from the positive 0.35 per cent recorded in October.

The 11-month average return thus remained negative at 38.41 per cent. Three sub-sectors recorded positive returns of between 0.75 per cent and 5.3 per cent, a decline when compared with the sixteen sub- sectors that recorded positive returns of between 0.37 per cent  and 29.3 per cent in October.

Also, twenty-eight sub-sectors recorded negative returns of between 0.42 per cent and 19.1 per cent compared to 15 sub-sectors that recorded negative returns of between 1.25 per cent and 10.6 per cent in October.

Thirty-three equities recorded positive returns of between 0.3 per cent and 27.34 per cent compared to 71 equities that recorded positive returns of between 0.35 per cent and 53.4 per cent in the preceding month. 109 equities recorded negative returns of between 0.55 per cent and 52.74 per cent compared to 70 in October.

Cumulatively, only two sub-sectors gave investors cause to smile in the month under review. The Building
Materials and Printing/Publishing sector recorded positive returns. The other sub-sectors recorded zero or negative return of between 0.03 per cent and 92.34 per cent.

Also, 26 equities recorded positive cumulative return of between 0.5 per cent and 193.2 per cent while 154 equities recorded negative 11-month average return of between 0.03 per cent and 92.34 per cent.

Other major indices for measuring market performance also recorded significant decline in the month under review. The NSE Banking index dipped by 1.76 per cent to close at 822.34 points, The NSE Food and Beverages index depreciated by 3.11 per cent to close at 500.07 points, NSE banking index shed 5.38 per cent to close at 337.02 points, NSE Insurance Index was the highest hit, dropping by 13.41per cent to close at 257.41 points while the NSE Oil and Gas Index shed 3.36 per cent to close at 292.12 points.

First Bank of Nigeria Plc emerged the most capitalised company in the month under review, with a market capitalisation of N406.1 billion, dropping by 5.7 per cent from the previous month’s figures.

Nigerian Breweries Plc followed with a market capitalisation of N397.03 billion, dropping by 3.7 per cent from N412.2 billion recorded in October, Zenith Bank Plc trailed with a capitalisation of N328.3billion, dropping by 9.2 per cent from N361.7 billion recorded in October.

GTBank Plc followed with a market capitalisation of N285.22 billion, dropping by 1.6 per cent, while United Bank for Africa Plc recorded a market capitalisation of N239.28 billion, dropping by 6.7 per cent from the previous month’s figures.

Other highly capitalised stocks in the top ten category include: Guinness Nigeria Plc N194.7 billion, Dangote Sugar Refinery Plc N176.4 billion, Benue Cement Company Plc N168.37 billion, Nestle Nigeria Plc N154.55 billion and Stanbic IBTC Bank Plc N133.69 billion


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