Last week’s massive losses in the international commodities and
financial markets have resonated further in the Nigerian space at the opening
of business yesterday as the Nigerian Stock Exchange,
NSE, benchmark index, the All Share Index, ASI, declined 2.2 per cent to 29,214.13 points bringing Year-To-Date loss to 15.7 per cent, the greatest loss in six months.
NSE, benchmark index, the All Share Index, ASI, declined 2.2 per cent to 29,214.13 points bringing Year-To-Date loss to 15.7 per cent, the greatest loss in six months.
Investors lost N227.7 billion yesterday to peg market
capitalization at N10 trillion at the close of market. Likewise, market
activity declined as value and volume traded shed 43.9 per cent and 25.5 per
cent to N2.8 billion and 257.7million units respectively.
This development came as oil price crash in the international
market continued with Brent Crude, Nigeria’s Sweet Crude benchmark, and West Texas
Intermediate crude both traded at six-year lows of USD43.48 (down from last
weekend’s price of USD45.46 and USD38.89 (down from USD39.89 last weekend) a
barrel, respectively.
Basic provisions of
2015 budget
This meant further erosion of Nigeria’s ability to implement the
basic provisions of 2015 budget.
Financial and investment bankers who spoke to Vanguard yesterday at close of
markets indicated that they expected the development in the international
markets to worsen market outcomes in Nigeria this week.
According to Afrinvest Group, a Lagos investment
banking firm; “Today’s (yesterday) performance reflects the negative
sentiments that have persisted in the Nigerian equities market.
Given the sustained run of losses in the market and the absence
of a catalyst to excite investors, performance is expected to be driven by
speculations in the short term, thus, we advise investors to maintain medium to
long term investment horizons as headwinds continue to bedevil the equities
market in the short term.
”
”
The bears had sustained its reign over the Nigerian stock market
last week as the market closed in the red on four trading days of the week
extending weekly losses for the third consecutive week.
Analysing the global trend Afrinvest economists had said
“negative investor sentiments persisted across regions given sustained
pressures on oil prices while slowdown in the growth of the Chinese economy
(world’s 2nd largest economy) has further exacerbated poor sentiment.”
The analysis
The analysis added that the recent devaluation of the Chinese
currency, Yuan, has heightened uncertainties across regions, prompting a further
pullback in the global equities markets last week.
Global equities market had extended downward trend Week-on-Week
(W-o-W). In the developed markets, the UK FTSE sustained its bearish run as the
index lost 4.1per cent W-o-W. The European markets continue to grapple in fears
of a slower Chinese GDP growth. This was observed in the performance of the
German DAX and France CAC which declined 5.8 per cent and 4.6 per cent W-o-W
respectively despite manufacturing data that showed stronger growth during the
week.
Asian markets
In the Asian markets, the China Shanghai Composite index tumbled
11.5 per cent following the release of manufacturing data that showed a
slowdown in pace of growth after the recent devaluation of the Yuan. Similarly,
the Hong Kong Hang Seng and the Japan Nikkei depreciated 6.6 per cent and 5.3
per cent respectively as negative sentiments linger on in the markets.
In the rest of the BRICS markets, Russian RTS declined 7.4 per
cent as persistent fall in oil prices coupled with economic sanctions
heightened negative sentiments towards the market. The Brazilian IBOVESPA
showed signs of improvement close to the end of the week as a mild rally lifted
the market. However, the index slipped 3.5 per cent to close the W-o-W in the
red. The South African FTSE and India BSE also dipped 3.3 per cent and 2.5 per
cent respectively.
In Asia, the Shanghai Composite Index slid 8.5 percent and Hong
Kong’s Hang Seng Index fell 5.8 percent, tumbling further into a bear market.
The measure is about 25 percent below an April high, with a gauge of price
momentum dropping to the lowest since the October 1987 stock-market crash.
Greater China
equities
Greater China equities plummeted, with Taiwan’s benchmark gauge
dropping as much as 7.5 per cent. More than USD4 trillion was wiped from the
value of Chinese equities from June 12, 2015 to last weekend.
Performance of the African markets mirrored other regions as all
the markets along with Nigeria’s traded downwards W-o-W save for the Ghana GSE
(+0.7 per cent). The Egypt EGX lost the most (-9.0 per cent) W-o-W, followed by
the Nigerian All Share Index (-2.7 per cent), and the Kenya NSE (-2.0 per
cent).
The Bloomberg Commodity Index fell 1.8 percent, heading for the
lowest closing level since August 1999.
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