Stocks Drop as Uncertainty over Naira Assets Fuels Sell-offs

Stocks Drop as Uncertainty over Naira Assets Fuels Sell-offs

Stocks Prices drop as uncertainty over Naira assets fuels sell-off on Friday with year to date losses stretching above 4% despite initial rally early in the year.

After negative outing recorded yesterday, the equities segment of the Nigerian Stock Exchange recorded yet another loss amidst sell-offs in bellwether stocks.

Analysts said today’s losses stemmed mostly from sell-offs on some tier 1 banking stocks, together with MTNN which shed 125 basis points at the close of the market.

Chapel Hill Denham noted the equity investors remain largely apprehensive towards naira risk assets, as profit-taking activities extended for the second straight sessions.

The NSE All-Share Index dipped by 15 basis points, taking the cumulative losses for the week to 1.73% above previous week.

Consequently, the year to date loss rose to 4.03%, while the stock market capitalisation declined to N20.221 trillion on Friday.

The combination of Regency Alliance Insurance (+10.00% to N0.33), FLOURMILL (+10.00% to N29.70), and NEM (+9.73% to N2.03) were today’s top gaining stocks.

On the flip side, UNITYBNK (-9.59% to N0.66), AFRINSURE (-9.09% to N0.20), and SOVRENINS (-7.69% to N0.24) were today’s top losers.

Chapel Hill Denham said performance across its coverage universe was mixed as 2 of 5 under the firm’s coverage indices closed in the red terrain.

The NSE banking and NSE oil & gas indices closed positive, dipping by 9 basis points and 23 basis points respectively.

The preceding completely offset the gains recorded in NSE consumer goods and NSE insurance, both of which notched higher by 103bps and 132bps, respectively. NSE industrial goods closed flat.

The market’s activity was broadly bullish, with the total volume rising significantly by 73.58% to 294 million.  Meanwhile the total value traded similarly rose by 77.84% to N3.770 billion.

Today’s most traded stocks by volume were TRANSCORP (56.92mn units), INTBREW (40.88mn units), and GUARANTY (30.97mn units).

On the other hand, the top traded stocks by value were NESTLE (N1.142bn), GUARANTY (0.954bn), and NB (0.304bn).

Also, the Chapel Hill Denham’s Paramount Equity Fund (PEF) and the Women Investment Fund (WIF) declined by 7bps and 18bps, respectively.

In the money market, financial system liquidity remained under pressure today, opening in deficit of N34.2 billion from a surplus of N64.0 billion yesterday.

Dearth of Alternative Pressured Treasury Assets Yields Downward

Notwithstanding, money market rates closed slightly lower, albeit elevated at double digits.

Notably, the Open Buy Back (OBB) and Overnight (O/N) rates declined by 200bps and 216bps to 13.33% and 14.17% respectively.

Next week, funding pressures will likely ease, due to OMO maturities estimated at N104bn, and bond coupon payments totaling N142.09bn.

The Nigerian fixed income market continued to trade sideways amid monetary policy uncertainty.

In the bills market, the NTB and OMO benchmark curves were unchanged at an average of 2.53% and 6.73% respectively.

However, the benchmark bond yield curve compressed by an average of 6bps to 9.93%.

Analysts said this was mainly driven by short (-6bps to 7.73%) and inter-mediate (-17bps to 10.36%) bonds, while long term yields rose by an average of 7bps to 11.16%.

Stocks Drop as Uncertainty over Naira Assets Fuels Sell-offs