By Kayode Tokede
Following persistent macro economic challenges, Investors in Nestle Nigeria Plc, Nigerian Breweries Plc and four other listed companies on the Nigerian Stock Exchange (NSE) lost about N193 billion in January.
Investors’ profit-taking in these blue chip companies depreciated the market capitalization by N283 billion from N9.256 trillion it opened the year 2017 to close at N8.973 trillion on Tuesday, January 31, 2017.
Consequently, the NSE All-Share Index which is the barometer of the market movement dropped by 838.38 basis points to close first trading month at 26,036.24 basis points from 26,874.62 basis points it opened for trading in 2017.
According to data gathered by Nigerian NewsDirect, Investors in Nestle Nigeria Plc suffered the highest of N65.79 billion within one month of active trading.
The multinational company share price had opened for trading at N810 (N642 billion in market capitalization) to close January at N727 per share (N576.26 billion in market capitalization).
Investors in Nigerian Breweries Plc recorded a loss of N64.9 billion in market capitalization when its share price moved from N147.99 to N139.80.
With a loss of N4.7 billion in six months unaudited result and accounts for half year ended December 31, 2016, Investors in Guinness Nigeria lost N28.46 billion as its share price dropped by N18.90 or 22.8 per cent from N83.05 to N64.15.
While speaking on half year ended December 31, 2016 accounts, Managing Director/CEO, Guinness Nigeria Plc, Mr. Peter Ndegwa, said, “The unrealised foreign exchange losses during the half year meant that our net finance cost grew by 166 per cent.
“As a result of the high input costs (in part driven by foreign exchange) and the foreign exchange impact on financing costs, we recorded a Loss Before Tax of N4.6 billion.”
Others are 7-up bottling company, N10.2 billion; Forte Oil, N17.2 billion; Mobil Oil Nigeria Plc and Total Nigeria lost N3 billion in market capitalization respectively.
Analysts attributed the capital market performance to macro economic challenges and investors sentiment trading amid hike in inflation, illiquidity in foreign exchange and government indecisive fiscal policies.
The National Bureau of Statistics (NBS) had reported 18.55 per cent inflation rate in December 2016 from, 0.07 per cent higher than 18.48 per cent recorded in prior month.
The International Monetary Fund (IMF) had blamed the doubled digit inflation rate on the challenges around foreign exchange, adding that efforts of the Central Bank of Nigeria (CBN) to defend the naira by foreign exchange rationing crumbled.
A group of analysts at FSDH noted that the depreciation recorded in the foreign exchange rate particularly in the parallel market between the two months and higher prices in the international market put further pressure on domestic prices in January 2017.
The Managing Director, Highcap Securities Limited, Mr. David Adnori, explained to our correspondent that the capital market performance is a reflection of the macro economic challenges.
In his words, “The equities market declined in January is a reflection of the nation’s economy. The economy is still in recession as expected. Investors’ confidence is still low considering poor corporate earnings by listed companies.
He noted that the capital market might appreciate in February once listed companies announced impressive earnings.
“It is only impressive results by listed companies that can propel the capital market in weeks ahead,” he said.