Low liquidity, political concerns drag stock market index by 1.3%

A mix of low liquidity and political concerns have continued to increase price volatility on the Nigeria Stock Exchange, as the index dropped by 1.3 per cent last week.

Analysts have argued that the ongoing volatility will persist as third quarter numbers will assist investors and fund managers to rebalance their portfolios, while watching the political space and full year company earnings position, as well as post-election market dynamics. 

According to them, the “January effect”, which was absent in 2018, will resurface this time due to low liquidity in the market. ahead of the 2019 general elections that may influence the market negatively. 

Therefore, they maintained that positive economic or political news or information is needed to reverse the trend before the presidential election and 2018 full year earnings season. 

Specifically, the Chief Research Officer of Investdata Consulting, Ambrose Omodion, said: “Investors should review their positions in line with their investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.

He added: “Discerning investors and members of Investdata Signal Group should use this opportunity to shop for companies that will grow their dividend payout, which will drive price during the earnings season and avoid the companies that are likely to cut dividend.”

Last week’s transactions showed that the All-Share Index depreciated by 1.28 per cent, while market capitalisation rose by 0.78 per cent to close the week at 30,638.90 and N11.426 trillion respectively.

All other indices finished lower with the exception of the NSE Oil and Gas Index that rose by 2.91 per cent.  

A turnover of 1.647 billion shares worth N8.413 billion were recorded in 14, 773 deals by investors on the floor of the exchange in contrast to a total of 3.129 billion units valued at N14.348 billion that was exchanged in 10,394 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 1.154 billion shares valued at N5.742 billion, traded in 9,174 deals; thus contributing 70.08% to the total equity turnover volume. 

The healthcare industry followed with 271.277 million shares worth N82.647 million in 219 deals.

The services industry trailed with a turnover of 91.734 million shares worth N 208.562 million in 232 deals.

Trading in the top three equities- Diamond Bank Plc, Union Diagnostic and Clinical Services Plc and NEM Insurance Plc accounted for 816.016 million shares worth N1.305 billion in 1,615 deals, contributing 49.54% to the total equity turnover volume.

Also, 22 equities appreciated in price during the week, lower than 52 in the previous week, as 45 others depreciated in price, higher than 18 of the previous week, while 97 equities remained unchanged, higher than 94 equities recorded in the preceding week.