Stocks lose steam in bearish trading on the Exchange

THE equities market closed Thursday on a negative note, as Nigerian Stock Exchange [NSE All Share Index [ASI] depreciated by 0.24 per cent to close at 29,687.93 basis points, compared with the 0.20 per cent depreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at -14.34 per cent.

  Market breadth closed negative as Mansard led 14 gainers against 24 losers topped by Rt Briscoe at the end of yesterday’s session- an unimproved performance when compared with previous outlook.

  Market turnover closed positive as volume moved northwards by 78.92 per cent against -26.33 per cent decline recorded in the previous session. Mbenefit, First Bank and First City Monument Bank were the most active to boost market turnover. Guaranty and Guiness topped market value list.

  Volume shockers included Continsure which led the list of active stocks that recorded impressive volume spike at the end of yesterday’s session.

  Meanwhile, currency dealers in Nigeria  agreed  to halt trading if there is a more than two per cent intra-day slide in the naira, which is being hit by the oil price slump and is at risk of speculative attacks.

 They expressed fear that if they did not act to curb the naira’s slide, the currency could head to N200 to the dollar, creating extreme volatility and adding to deteriorating liquidity conditions. The naira depreciated to N189.20 to a dollar yesterday, falling a second straight day despite central bank intervention.

 Like other emerging market currencies, the naira is also under pressure as the dollar strengthens on expectations the United States will soon raise interest rates.

 Banks used to have a one per cent net open position to deal on the currency before the devaluation, but the central bank cancelled it to zero in December. Last week it allowed banks a 0.1 per cent net position but warned them against carry trades or speculative activity.

  Banks can earn trading revenues when the naira is weak through carry trades, by borrowing the naira to buy dollars which they resell at a higher level to make a profit. That makes it difficult for genuine foreign exchange users to buy dollars when liquidity is tight.

  The central bank, which has often blamed speculators for naira weaknesses, set a new trading range of N160-N176 against the dollar after the devaluation but has struggled to keep the currency in that range.