Coronavirus, new VAT regime hit Nigeria’s stock market | Nigeria Newspaper- Nigeria News| Naija News

9.2.20

Coronavirus, new VAT regime hit Nigeria’s stock market

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Coronavirus, new VAT regime hit Nigeria’s stock marketThe recent outbreak of the deadly Coronavirus has continued to send panic through global markets, as the Brent price of crude oil slumped by 20.2 per cent YTD to $54.93 per barrel alongside the institution of the new Value Added Tax (VAT) which has also continued to put pressure on the Nigerian economy.
As a result, sentiments remained weak in the Nigerian equities market as profit-taking activities dominated, sending the All Share Index (ASI) southwards by 2.7 per cent, equaling the previous week’s loss, to settle the Year-to-Date (YTD) and Month-to-Date (MTD) returns at +4.6 and -1.6 per cent, respectively.
Despite the influx of unaudited full year-2019 results of some quoted companies on the Nigerian Stock Exchange (NSE), the market began the week on a bearish note as the benchmark index declined by 1.08 per cent to 28,533.4 points, as sell-offs of Tier 1 banking stocks continued.
The bears continued to grip the market on Tuesday as the ASI dropped 0.35 per cent to close at 28,432.3 points, driven by sell-offs in Dangote Sugar and Zenith Bank.
The bearish sentiment persisted as sell-offs in Dangote Cement and Nigerian Breweries drove the index southwards by 1.2% to 28,093.76 points on Wednesday. Thursday’s session, however, saw some form of price appreciation in banking stocks, which drove the ASI up by 0.17 per cent to close at 28,140.41 points.
Friday saw the bears returning to the market as investors retreated, leading to a 0.26 per cent to close the week at 28,067.09 points while market capitalisation slipped by N240 billion to close the week at N14.618 trillion from N14.857 trillion.
This was precipitated by selloffs in market heavyweights Dangote Cement, BUA Cement and MTNN.
Analysing the sectors, the Industrial Goods (-2.2 per cent), Oil & Gas (-3.0 per cent), Consumer Goods (-2.2 per cent), and Banking (-1.5 per cent) indices all declined, while the Insurance (+0.2 per cent) index was the sole gainer.
On the price movement chart, 18 stocks depreciated while 16 others appreciated. Cileasing topped the losers’ chart with 10 per cent to close at N5.40 per share, Trans Express was next with 10 per cent to close at 0.81 kobo, NPF Microfinance Bank dropped 9.68 per cent to close at N1.12, Neimeth lost 9.09 per cent to close at 0.50 kobo while Eterna fell by 8.59 per cent to close at N2.15.
Japaul Oil topped the gainers’ chart with 10 per cent to close at 0.22 kobo per share. Law Union followed with 9.90 per cent to close at N1.11, Livestock feeds increased by 9.90 per cent to close at 0.60 kobo, Honeywell rose by 7.84 per cent to close at N1.10 while Chams appreciated by 6.90 per cent to close at 0.31 kobo.
Activity level on the bourse as at February 6 weakened as volume and value traded fell 9.4 and 19.9 per cent to 317.2 million units and N3.4 billion respectively, exchanged in 4,340 deals. The most active stocks by volume were FBN Holdings (57.3 million shares), FCMB (43.2 million shares) and Zenith Bank (34.3 million shares) while Nigerian Breweries (N1.2 billion), Zenith Bank (N705.5 million) and FBN Holdings (N345.6 million) led by value.
Reacting, analysts at Afrinvest said: “We believe that the market would continue this downtrend, especially as earnings released this week has been largely mixed and insufficient to boost investor confidence”.
Cordros Capital in their weekly assessment said: “In our view, the trend witnessed this week is likely to persist, as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market returns. Nonetheless, we advise investors to take positions in fundamentally justified stocks”.
On his part, the Managing Director, Decof Investments, Moses Igbrude, said that investors are trying to adapt to the current situation of the economy, noting that global crisis is having an impact on the Nigerian stock market.

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