Trading on the Nigerian Stock Exchange (NSE) ended Friday with investors in quoted companies becoming N1.641 trillion or 14.21 per cent poorer, as cumulative value of investments on the bourse (or market capitalisation) fell from N11.477 trillion at the end of December 2014, to N9.846 trillion.
The All-Share index fell by 5,095.08 to 29,562.08 basis points from last year-end’s 34,657.15 points. In plane terms, investors’worth dropped by an average of 14.7 per cent in the first month of 2015.
At the end of trading for the entire 2014, NSE capitalisation fell by N1.748 trillion or 13.22 per cent, while the index declined by 6,672.04 points or 16.14 per cent from N13.226 trillion and 41,329.19 respectively.
According to data released by the NSE at the weekend, the Nigerian unit of Nestle suffered the biggest loss in absolute time, as its share price lost N211.50; followed by Seplat Petroleum Development Company which lost N65, wiping out the N48.99 gain it recorded in December.
Dangote Cement, the NSE’s biggest company by capitalisation closed N44.00 down; ahead of Guinness Nigeria’s N38.16; just as rival Nigerian Breweries, the NSE second biggest stock, added N23.28 to previous month’s 682 kobo.
Julius Berger closed N15.77 down; pharmaceutical and healthcare giant, GSK, tumbled N10 apiece down; 7-Up Bottling Company, 940 kobo; Mobil Oil’s 800 kobo brought its two-month decline to N15.20; while Guaranty Trust Bank followed with 515 kobo slide; among others.
The month’s gainers’ table was topped by Presco which chalked 816 kobo; PZ Cussons, 584 kobo; UACN, 320 kobo; Beta Glass, 222 kobo; Forte Oil, 210; just as Okomu Oil Palm and Lafarge gained 205 kobo while Total recovered 150 kobo from the N14.97 it lost in December.
In percentage terms, however, Presco also ended January as the most investor friendly, offering them capital appreciation of 33.31 per cent. PZ Cussons grabbed 24.54 per cent; Cutix, 19.23 per cent; Union Bank, 11.76 per cent; and New Gold ETF, 9.64 per cent.
At the end of January and in percentage terms, Diamond Bank was the biggest laggard, as it suffered a 33.84 per cent haircut, followed by Dangote Flour’s 34.07 per cent, and Julius Berger, 26 per cent.
Skye Bank, which last week took ownership of Mainstreet Bank Limited from the Asset Management Corporation of Nigeria (AMCON), lost 25.19 per cent; Fidelity Bank, 22.84 per cent; and Guinness, 22.69 per cent.
Dangote Cement dropped 22 per cent; Access Bank, 21.52 per cent; Nestle, 20.90 per cent; and RT Briscoe, 20.78 per cent.
Meanwhile, the nation’s foreign exchange reserves also closed slightly negative for the month, as it dropped by $130.702 million or 0.37 per cent year-to-date from $34.468 billion at the end of 2014, to $34.337 billion on January 29, 2015, according to the latest data released by the Central Bank of Nigeria (CBN) at the weekend.
On a month-on-month basis, the reserves level dropped by $190.773 million or 0.55 per cent from $34.528 billion on December 29, 2014, as the CBN continued its defence of the Naira on the back of excessive demand for the U.S.$, in addition to the activities of currency speculators.
The CBN Governor, Godwin Emefiele, in a presentation on Friday in Lagos, said there was a correlation between the price of oil, foreign reserves, stock market and the value of the Naira.
Emefiele noted, for example, that between June 30 and December 31, 2014, the price of Bonny light, Nigeria’s blend of Brent crude, fell by 50.7 per cent from $112.78 per barrel to $55.57/b, before falling another 15 per cent to $42.22 per cent on January 23.
Addressing captains of industry and critical stakeholders at a breakfast meeting on Tuesday, January 27, he recalled that within the period, the nation’s foreign reserves dropped by 12.3 per cent from $39.07 billion last July to $34.26 billion by January 22, 2015.
As a result, he said the Naira was not spared, as it “depreciated by eight and13 per cent at the official and interbank markets in 2014 and by 5.6 per cent at the interbank markets as at January 23, 2015.”
The NSE All-Share index also fell by 15.9 per cent in 2014 and 29,687 as at January 22, 2015, Emefiele added.
Nigerians were at the weekend told to brace up for the austerity period, going by presentations by leading economists in Lagos.
One of them, Bismarck Rewane, chief executive of Financial Derivatives Limited, in his presentation to the Central Securities Clearing System Limited (CSCS) identified nine factors that would dominate economic discussions this year, including further devaluation of the Naira and further depletion in the nation’s external reserves.
Rewane said the Naira could depreciate to N202/$, even as reserves could fall to $25 billion from the current $34 billion by year-end, as the Central Bank of Nigeria (CBN) “continues to support the Naira.”
He also foresees a further hike in Monetary Policy Rate eventually from 13 to 15 per cent after the elections; in the midst of lower oil price; higher headline inflation rate; reduction in interest rates; Nigeria’s removal from J.P Morgan index; credit rating watch; and political uncertainty.
Rewane warned of a likely imported inflation that would “hit consumers hard,” rising to 11.3 per cent while GDP growth drops to 3.5 per cent.
Speaking on “commodity shocks and the Nigerian capital markets: A macro-economic perspective,” he also foresees a cut in fuel subsidies to government help $3.5 billion.
More so, he said Nigeria as a commodity exporter is vulnerable to price shocks, especially with oil accounting for 85.1 per cent of total exports; about 60 per cent of fiscal revenue.