Consumer goods companies listed on the Nigerian Stock Exchange (NSE) recorded a loss of about N508 billion between January and February 8, 2016, following sell pressure that had pervaded the equity market.
Investigation by New Telegraph showed that the sub-sector, which opened at the beginning of the year at N2.624 trillion, closed at N2.116 trillion as at last Monday. This represented a loss of N508 billion or 19.35 per cent.
Panic by local investors had compounded the pressure on foreign portfolio investors who were exiting the market as the price of crude dropped into a bear market on concern that measures the country’s central bank put in place to stem capital outflows would hinder their ability to sell holdings in Africa’s top oil producer.
Just as other quoted firms in Nigeria facing depression in share prices, market sentiments for the shares of most of the consumer goods companies have dwindled relatively due to challenging environment faced by the real sector of the economy.
The latest reports from the Nigerian Stock Exchange showed that total foreign transactions at the nation’s equities market decreased by 33.39 per cent from N1,538.92 billion recorded at the end of 2014 to N1,025.07 billion at the end of 2015 while total domestic transactions decreased by 22.53 per cent from N1,136.63 billion recorded at the end of 2014 to N880.56 billion recorded at the end of 2015. Total transactions at the nation’s bourse also decreased by 41.72 per cent from N189.72 billion recorded in January to N110.56 billion (about $0.56 billion) in December 2015.
This represents a decrease of 13.49 per cent from N127.8 billion recorded in November. On a monthly basis, the Nigerian Stock Exchange polls trading figures from major custodians and market operators on their foreign portfolio investments (FPI).
According to (NSE) highlights, the domestic composition of transactions on the Exchange between January and December 2015 showed that the total domestic transactions increased by 7.26 per cent from N55.2 billion in November to N59.21 billion in December 2015.
In comparison to December 2014, total domestic transactions decreased from N133.6 billion to N59.21 billion. The institutional composition of the domestic market which was about 47.17 per cent in November increased to 67.86 per cent at the end of December, whilst the retail composition decreased from 52.83 per cent to 32.14 per cent in the same period.
In comparison to December 2014, institutional composition decreased from 72.99 per cent to 67.86 per cent, whilst the retail composition increased from 27.01 per cent to 32.14 per cent in the same period. In 2013, there was a major rebound in the domestic component, which led to an almost equal split in foreign vs. domestic transactions.
This dropped in 2014 where FPI outperformed domestic transactions. In 2015 FPI dropped compared to 2014. However, it slightly outperformed domestic transactions in the same period. The Chief Executive Officer, Financial Derivatives Companies (FDC) Limited, Mr. Bismark Rewane, said it was likely that the current downturn in the nation’s capital market would be sustained in the near term. Rewane who stated this recently at the FDC Economic Bulletin said that money market rates are already at an all-time low, adding that it is expected to see a creeping up of rates as the level of government borrowing increases.
“While the increasing inflationary trends will have investors worry about their returns, the major drivers of stock market activities will be macro- economic uncertainties and likely further increases in US interest rates. Furthermore, expected Q4 earnings will be another determinant of stock market performance.
The bearish trend in the stock market is expected to continue in the near term. Nigeria’s external reserves are below $29 billion. The anticipated adjustment in the exchange rate band is expected to slow down the rate of depletion, as the demand pressure eases