By Peter Egwuatu
LAGOS — Investors in the Nigerian stock market, yesterday, lost N93.5 billion in the first trading year of 2016, amidst global equity markets fall, signifying slow economic activity.
Specifically, the Nigerian Stock Exchange, NSE, market capitalisation, which represents total value of stock market transactions dropped by N93.5 billion or 0.95 cent to close, yesterday, at N9.757 trillion from N9.850 trillion it ended on December 31, 2015.
In the same vein, another stock market gauge, All Share Index dropped by 0.95per cent or 95 bases points to close at 28,370.32 points from 28,642.25 points it ended on the last trading day in December 2015.
The NSE ASI and NSE 30 lost 95 bases points and 120 bases points, putting Year to Date, YTD, returns at -0.95 per cent and -1.20 per c ent respectively.
The market recorded turnover of N700 million on 98 million shares. Value and volume of transactions were below December averages by 73 per cent and 75 per cent respectively.
The Consumer Goods sector dropped by 294 basis points bowed to profit taking with Nigerian Breweries, NB Plc, dropping by -500 bases points and NES, notwithstanding gains recorded by Zenith Bank (+178 bases points).
Meanwhile, on the global markets, rising tensions in the Middle East also increased demand for safe-haven assets. Global benchmark Brent crude rose above $38 a barrel as some speculated a breakdown in diplomatic ties between Saudi Arabia and Iran could result in oil supply restrictions.
Worries that the weak Chinese data could portend slower world economic growth hurt Wall Street and sent key indexes down more than 2 percent in early trading.
The Dow Jones industrial average fell 351.01 points, or 2.01 percent, to 17,074.02, the S&P 500 slid 38.46 points, or 1.88 per cent, to 2,005.48 and the Nasdaq Composite lost 127.45 points, or 2.55 per cent, to 4,879.96.
China’s yuan currency hit its lowest in more than four years after the central bank lowered its guidance rate and factory activity contracted for a 10th straight month in December, at a sharper pace than November.
Stocks in Europe fell sharply, with Germany’s DAX index tumbling 4.0 percent and the pan-European FTSEurofirst 300 index slipping 2.4 per cent.
The sell-off in China triggered a circuit-breaker that suspended equities trading nationwide for the first time and put at risk months of regulatory work to restore market stability.
In the United States, the iShares China large-cap ETF fell 3.7 per cent, it’s biggest single-day slide since a 4.5 percent drop in September.
Investors are warranted to worry about global growth as the factory numbers may not fully indicate how quickly China has been slowing down, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
“The China seven per cent drop last night and the close of the market, along with Saudi Arabia, are causing investors to rethink to their growth estimates and the geopolitical risk that’s really out there,” Mendelsohn said.
Islamic bonds listing
Meantime, FMDQ OTC Securities Exchange Plc, said it planned to list Islamic bonds on the floor of the Nigerian Stock Exchange in 2016 to deepen the nation’s Debt Capital Market (DCM) as contained in its 2016 outlook.
The company said it would offer a more diversified products portfolio, including ‘Sukuk’ bonds to enhance the development of the DCM.
According to the company, it will ensure the quotation of bonds of private companies in 2016 as well as the integration of the FMDQ markets.
The statement added that the company would continue to work collaboratively with its stakeholders FMDQ listed other areas the company would focus on in 2016 to include capacity building and financial markets education for all FMDQ markets stakeholders.
A total of N130.01 trillion worth of transactions were recorded on the platform in the first 11 months of 2015.
Statistics from the company indicated that the figure was an increase compared to the N104 trillion worth of transactions recorded in 2014.
The total value for this year included transactions in over-the-counter market in foreign exchange comprising Treasury Bills (TBs), bonds and money market derivatives.
TBs were the most active, accounting for N46.29 trillion worth of transactions and were followed by repurchase agreements/buy-backs with N29.69 trillion worth of transactions.
Foreign exchange came third with N25.50 trillion worth, while unsecured placements/takings accounted for N11.62 trillion.
FMDQ said it was committed to promoting an efficient, transparent and well regulated market to attract and retain domestic investors.