Economy crisis: Shares on consumers’ Index tumbled by 18.1% in four months


By Kayode Tokede

As the nation’s economy continues to worsen on the heels of scarcity of foreign exchange, among others, shares listed in the Nigerian Stock Exchange (NSE) consumers’ index have suffered the highest decline of about 18.1 per cent in four months of 2016.

Consumers’ Index is designed to provide an investable benchmark to capture the performance of the consumer goods sectors, and the index comprises most capitalized and liquid companies in food, beverage and tobacco.

The NSE consumers’ index has moved from 746.19 basis points in the year to 611.05 basis points as at April 29, 21016.

Following investors sell-off attributed to economic crisis, the NSE All-Share Index in four months has dropped by 12.5 per cent to 25,062.41 basis points.

Companies in this Index are Nestle Nigeria Plc, Cadbury Nigeria Plc, Nigerian Breweries Plc, Flour Mills Nig. Plc, Honeywell Flour Mill Plc, among others.

The sector has suffered numerous challenges, as Central Bank of Nigeria’s (CBN) polices that include the banned 41 items access to foreign exchange (Forex) market that spur investors sell-off and stoppage of Forex to Bureau De Exchange (BDC). .

According to Nigerian NewsDirect investigation, investors who invested in Nestle Nigeria have lost 29 per cent of their investment in four months from N860 it opened in January 2016 to N615.26 it closed in April 2016.

Guinness Nigeria with poor earnings came second with a decline of  24.2 per cent to N91.28 from N120.4 it opened in the year while Honeywell Flour Mill Plc also dropped by 24 per cent from N2.05 to N1.56.

Others are Nigerian Breweries Plc that shed 14.8 per cent from N136 to N115.89; Cadbury Nigeria Plc investors lost nearly 10 per cent in four months from N17.15 to N15.50 and Dangote Sugar Refinery Plc shares depreciated by five per cent from N6.03 to N5.73 as at April 29, 2016.

Market stakeholders had warned that the Forex is still characterized by considerable uncertainty which drives speculative activities and impacts negatively on investors’ confidence.

Hitherto, the Lagos Chamber Of Commerce and Industry had urged that the President Buhari led administration needs to be clearly define its economy blueprint.

On forex market, they advised that excessive regulation and documentation should be avoided as it could undermine the development of a robust autonomous forex market.

According to LCCI statement, current controls and regulations of forex inflows into the economy should be relaxed, without necessarily compromising the money laundering preventive measures of the relevant authorities.

They explained that overregulation considerably hurts the economy and it is paramount for regulator to articulate policies needed to stimulate and unlock the huge potential in diaspora remittances and other capital inflows into the economy.

The Lagos based non-profitable organization said the restrictions  have caused considerable loss of jobs and many more jobs are at risk as many firms run out of stock of their critical input for production.

From a shareholder perspective, Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, had explained to Nigerian NewsDirect that the decline in consumers’ goods shares are not only affected by factors within the nation’s economy but on global issues.

“The fall in global oil has been a major factor affecting Nigerian economy. So our market has been resilient, though there are issues that the regulators in our market need to address. When a finger of an investor is burnt, he or she will be careful to release his or her other fingers to be burntt. That is what is really affecting the market.”

Okezie said, “The decline we are experiencing in our market now is somehow normal as some investors are selling their shares to meet up with other expectations. But, there is hope that the market will rebound once investors see clearer picture of the Federal Government‘s policy direction. The Buhari administration has started fighting corruption and tackling insecurity. So these are some of the things that will attract investors to invest in our economy.”