By Nkiruka Nnorom
Stock market operators have said that the sell pressure in the market is poised to continue this week following the persisting negative market sentiment.
They posited that investors, especially Foreign Portfolio Investors, FPIs, will continue to sell their shares amidst slower growth in the second quarter of 2018, Q2’18, Gross Domestic Product, GDP, and higher Treasury Bills, TBs, stop rates.
The down-trend in the Nigerian Stock Exchange, NSE, wasexacerbated last week as a result of lower-than-expected, GDP, growth figure, which sent negative signals to the market as well as the news of the regulatory sanctions by the Central Bank of Nigeria, CBN, on four banks including two quoted on the NSE for “illegally” repatriating funds on behalf of a telecommunications company, MTN Nigeria.
As at the close of trading on Friday, the All Share Index, ASI, dropped by 1.63 percent to 34,848.45 points, while the equities capitalisation declined by N211 billion to N12.722 trillion, representing 1.63 percent decline.
Analysts at Afrinvest Securities stated that “Following the bearish performance this week, the sell pressures will persist over the near-term given the general negative mood in the market and lack of drivers to sway the market to the positive region.”
While calling on investors to tread cautiously, analysts at Cordros Capital observed that the absence of a positive one-off catalyst and brewing political concerns would continue to cast a shadow on outlook for risky assets.
Vetiva Capital Management stated that trading in the new month would begin on a weaker note as investors remain pessimistic in the short-term. “We also highlight that recent earnings releases did little to improve market sentiment, further evidence of the pre-election blues,” they said. Analysis of the sectorial activities last week showed that performance across the sectors was bearish, as three of the five sectors closed negative.
The industrial goods sector led decliners after dropping by 4.7 percent following profit taking in Dangote Cement Plc and Lafarge Africa Plc, which fell by three percent and 10.5 percent respectively.
Similarly, the banking sector shed 1.5 percent on the back of sell-offs in Guaranty Trust Bank, Zenith Bank and FBN Holdings Plc, which went down by four percent, 4.3 percent and 8.8 percent respectively, while persistent sell pressures in Continental Reinsurance Plc, Standard Alliance Insurance and Sovereign Trust Insurance dragged the insurance sector down by 0.1 percent.
On the flipside, the oil & gas and consumer goods sectors rose 1.0 percent and 0.3 percent respectively during the week.