By Peter Egwuatu The Nigerian stock market recorded a significant decline Week on Week, WoW following sell off by institutional investors over the new tax reform, which is expected to raise the Capital Gain Tax, CGT from January next year. Expectedly, the market dropped by 1.7 %, with the Nigerian Exchange Limited, NGX All Share Index […]
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By Peter Egwuatu
The Nigerian stock market recorded a significant decline Week on Week, WoW following sell off by institutional investors over the new tax reform, which is expected to raise the Capital Gain Tax, CGT from January next year.
Expectedly, the market dropped by 1.7 %, with the Nigerian Exchange Limited, NGX All Share Index declining to N147,013.59 points last Friday from 149,524 points the previous week.
Similarly, the market capitalisation, which represents the total value of shares listed on the Exchange, declined by over N1.497 trillion to close on Friday at N93.501 trillion from N94.998 trillion.
Meanwhile, after the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun’s meeting with the capital market operators, who assured them of resolving their concern over the new tax reform on the CGT, the market rebounded from last Wednesday to the end of Friday. The Minister’s assurance helped restore confidence across the investment community, reversing the previous session’s sharp decline and fueling renewed optimism among institutional and retail investors alike.
A review of trading last week showed that a total turnover of 7.325 billion shares worth N156.425 billion in 134,383 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 3.575 billion shares valued at N107.011 billion that exchanged hands in 146,429 deals in the previous week.
The Financial Services Industry (measured by volume) led the activity chart with 6.497 billion shares valued at N87.381 billion traded in 56,148 deals; thus contributing 88.69% and 55.86% to the total equity turnover volume and value respectively. The Consumer GoodsIndustry followed with 180.775 million shares worth N12.015 billion in 16,378 deals. Third place was the Services Industry, with a turnover of 138.365 million shares worth N2.402 billion in 7,869 deals.
Trading in the top three equities, namely Cornerstone Insurance Plc, Access Holdings Plc and Zenith Bank Plc (measured by volume), accounted for 4.752 billion shares worth N41.132 billion in 14,304 deals, contributing 64.87% and 26.29% to the total equity turnover volume and value respectively.
Reacting on the market development, analysts at InvestData Consulting stated: “The renewed buying interest was further supported by an improvement in liquidity conditions in the money market and expectations that the Central Bank of Nigeria (CBN) might maintain its monetary policy rate to preserve price stability while allowing credit flow to the productive sector.
Investors also appeared encouraged by signs of increased government fiscal activity, which could stimulate private sector performance and boost company revenues in the coming quarters”.
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