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Weak sentiment to persist as investors lose N16bn

By Nkiruka Nnorom

OPERATORS in the capital market have said that the weak sentiment that pervaded the equities market on the first three trading days of the year will continue this week following sell-offs ahead of the general election.

After closing the year on -17.8 percent loss, the market opened the new year on a downturn and sustained the trend till Friday, January 4, 2019, resulting in -1.28 percent week-on-week loss.

Pre-election jitters

Specifically, the All Share Index, ASI, declined by -1.15 percent on Wednesday when the market opened for trading and went further down on Thursday by -0.95 percent, before depreciating further by -0.4 percent on Friday.

Also, the sell-offs resulted in losses totalling N16 billion to investors as the equities market capitalisation fell to N11.426 trillion from N11.586 trillion at the beginning of the year.

Consequently, analysts at Afrinvest Securities, a Lagos-based investment banking firm, said that another round of bearish run would be recorded in the market this week as sell pressures persist due to pre-election jitters.

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Also, analysts at Vetiva Capital Management, said: “In the absence of a market stimulant, we foresee a continuation of investor apathy at the start of trading next week.”

Doing a sector by sector projection, analysts at Meristem Securities said that sell pressure is expected to continue in the banking sector as investors continue to take profit off counters, mostly the Tier 2 banking stocks.

For the consumer goods, they said: “The disappointing earnings performances of the stocks in the sector, last year, soured sentiment; hence selloffs subsisted this year. We expect another negative close next week, despite the marginal bargain trading opportunities.” In the industrial good sector, they projected a mixed trading of sell-off and pockets of bargain hunting, while the oil & gas and insurance sectors are also expected to close the week in red.

Meanwhile, a review of activities last week showed that across sectors, performance was equally negative as four of the five sectors closed in the red. The industrial goods sector was the biggest loser, down 3.9 percent on the back of losses in Lafarge Africa and Cement Company of Northern Nigeria, CCNN, which were down 9.6 percent and 7.5 percent respectively.

The banking sector trailed, falling 2.7 percent as Access Bank Plc and Zenith Bank Plc depreciated by 14.7 percent and 5.7 percent respectively. The insurance sector and consumer goods sector went down by 1.0 percent apiece.

On the other hand, the oil & gas sector was the lone gainer for the week, up 2.9 percent.

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