Shareholders of four most capitalised companies in Nigeria’s stock market lost about N1.120 trillion between January and March 9, 2015. This stemmed from massive sell-off that have pervaded the local bourse due to preparations for the general elections and the declining oil prices at the global markets. Oil, which accounts for about 90 per cent of Nigeria’s foreign exchange earnings and 80 per cent of revenue, have fallen by 50 per cent since June, last year, inflicting a huge blow on the naira that has been devalued twice in the last four months.
The currency initially exchanged at N168 per dollar at the official market last November, but currently trades at N197 per dollar. Oil, which also traded at about $110 dollars per barrel in June, now trades at below $60, indicating a sharp decrease in the country’s foreign exchange inflows.
The declining value of naira and the postponement of the elections had scared away foreign investors and sparked a flight to safety. Meanwhile, the market capitalisation of the Nigerian Stock Exchange (NSE), which measures the value of stocks listed on the local bourse, stood at N10.410 trillion at the close of trading on Monday as against the opening figure of N11.477 trillion at the beginning of trading in January 2015.
The stocks that lost significant values are Dangote Cement Plc, Nigerian Breweries Plc, Nestle Nigeria Plc and Guaranty Trust Bank Plc. Checks by New Telegraph showed that Dangote Cement, which controls about 28 per cent of overall market capitalisation led the top four league with a loss of N801 billion or 30.72 per cent to close at N2.607 trillion on at the time of filing this report on Monday, March 09, 2015.
This is against N3.408 trillion opening figure in January. Nestle Nigeria trailed with a drop of N151 billion or 23.4 per cent to close from N801.9 billion to N649.9 billion, while Nigerian Breweries, which also ranked number two in market capitalisation followed with a decline of N147 billion or 13.3 per cent to close at N1.103 trillion from N1.250 trillion. Guaranty Trust Bank Plc depreciated by N109.7 billion or 2.73 per cent, from N741 billion to N721.4 billion.
The low sentiment in the market has been on the increase following upset in the financial market arising from insecurities, build up to 2015 elections and drop in oil price, among others. Financial analysts believed that some of these factors sent a shock wave to both local and foreign investors and created uncertainty in the investment environment, which led to retreat on the part of the bargain hunters and depletion in foreign portfolio investment in the country. The chief executive officer, Financial Derivatives Company, Mr Bismarck Rewane, had recently said that preparations for the elections and the declining oil prices were likely factors for the rise in the FPI outflow.
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