Aggressive profit-taking in Airtel Africa, BUA cement down equities market by N440bn in 3 days
By Kayode Tokede
Aggressive profit-taking by Investors on the Nigerian Exchange Limited (NGX) between Monday and Wednesday down the equities market by N440billion in three days, Nigerian NewsDirect findings have revealed.
Analysts have expressed that insecurity in the country, hike in inflation rate, among other factors contributed to aggressive sell-off by investors in the days under consideration.
The market capitalisation that opened on Monday at N20.14 trillion, dropped by N440.12billion to N19.97trillion on Wednesday, as investors profit-taking in Airtel Africa Plc, BUA Cement Plc and Zenith Bank Plc.
The combination of Airtel Africa Plc, BUA Cement and Zenith Bank shares have depreciated by N427.9billion, contributing about 97 percent of the equities market decline between Monday and Wednesday.
The market capitalisation of Airtel Africa has depreciated by N282.99billion when its share price opened at N753.3 on Monday to close at N678 per share on Wednesday, dropping by N75.3 per share.
Also, the market capitalisation of BUA cement dropped by N135.5billion when its share price closed at N70 on Wednesday from N74 it opened for trading this week.
In addition, the market capitalisation of Zenith bank dropped by N0.42billion in three days.
The breakdown of the equities market performance in three days revealed that the overall market capitalisation value lost N54 billion to close at N20.089 trillion on Monday, driven by price depreciation in large and medium capitalised stocks amongst which are, Fidson Healthcare, Lasaco Assurance, Oando, Ecobank Transnational Incorporated (ETI) and Dangote Sugar Refinery.
On Tuesday, Nigerian NewsDireect gathered that market capitalization value lost N364 billion to close at N19.725 trillion over price depreciation in large and medium capitalised stocks amongst which are; Airtel Africa, Presco, BUA Cement, Stanbic IBTC Holdings and PZ Cussons Nigeria, pushing the equities market to a new year low.
However, on Wednesday, the equities market closed the trading activities on a decline, thereby stretching the negative sentiment to three consecutive days as investors’ sell-off sentiment in the Financial and the Oil and Gas sectors push down market capitalization by N22 billion to close at N19.703 trillion.
The market loss on Wednesday was driven by price depreciation in large and medium capitalised stocks amongst which are; Zenith Bank, Access Bank. E-Tranzact International, University Press and Ecobank Transnational Incorporated (ETI).
Speaking with our correspondent, the Chairman of Association of Stockbroking Houses of Nigeria (ASHON), Partick Ezeagu, blamed investors’ profit-taking on insecurity challenges in the country, stressing that foreign investors are selling.
According to him, “The economy is in shambles as a result of insecurity. Most investors are noticing inflation rate in the country as most investors are taking profit to meet other obligations.
“As a result of that, the equities markets begin to take a dive in a big way.”
He expressed optimism that once insecurity is tackled, the equities market would bounce back.
In his words, “Nothing to worry about as regards the equities market growth. Once insecurity challenges is sorted out.”
Also speaking with our correspondent, the Managing Director/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi, blamed the downward performance on the equities to highly capitalised stocks on the bourse sell-off by investors.
According to him, “In our local market we have big players that comprises of Dangote Cement, BUA cement, Airtel Africa and MTN Nigeria.
“These four players control over 60 percent of the market capitalisation. If any of them lost 10 percent in a day, the overall market capitalisation likely to depreciate.
“The decline in the equities market does not mean other stocks are not appreciating.”
He added that the equities market of the NGX are not to blame as only four companies are controlling over 60 per cent of market capitalisation.
Analyst at PAC Holdings, Mr Wole Adeyeye, said investors are taking keen interest in government securities.
According to him, “The decline in the equities market in the last 3 days may be attributed to the interest of local investors in less risky assets, especially FGN bonds.
“Most investors positioned themselves for the June 2021 FGN bond auction and this adversely affected the Nigeria’s equities market.
“We may likely see reversal of the bearish trend in the coming trading days as the bond auction results, which DMO released today, showed a setback in yields across the board.”
The Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion, had said that “The global economy and market remain mixed as vaccine driven economic recovery across climates continue, as the World Bank recently upgraded the world economic growth outlook on ongoing vaccination and government polices at different level.
“Back home, the seeming economic recovery and mixed indicators are likely to continue in the new month as we expect more economic data and the events to confirm the real state of the nation economy as implementation of 2021 national budget and CBN intervention in critical sectors persist to boost productivity that will create employment and support recovery. Reasons for this are not far-fetched, given the impact of COVID-19 and insecurity in the system.”
