Turbulence in the political arena has sparked massive dumping and induced sell pressure on the equity sector of the Nigerian Stock Exchange as stock market investors lost N257 billion or 2.2 per cent at the close of transactions on Friday.
Analysts perceive there would be continued selloffs in the absence of any near-term positive trigger. They noted that the tense political environment would keep dampening investors’ confidence and aggravate more sell pressure.
The market capitalisation of listed equities tumbled significantly to close at N12,941 trillion from Thursday’s N13,228 trillion. The All Share Index (ASI) suffered the same fate, losing 786.19 points from 36,232.47 to 35.446.47.
The managing director of High Cap Securities Limited, David Adonri, said: “The massive selloff of last week Friday was centered around turbulence in the political arena. It impacted the market, dampening investors’ confidence. A lot of investors decided to sell off and hold onto cash.
“The direction of the market henceforth depends on how the political development unfolds. If the political uncertainties continue, it would keep affecting the market negatively and erode investors’ confidence.”
For the first time in several months, the performance of the local bourse was largely on the downturn last week as the ASI depreciated on all trading sessions.
The market witnessed the largest week on week decline since June 2018. The ASI declined 2.9 per cent to settle at 35,446.47 points, while market capitalisation decreased by N381.3bn to N12.9tn
As a result, the benchmark index closed the week in the red for the second consecutive week, as investors exited positions in some highly capitalised stocks.
The most affected were FBN Holdings, Mobil, Dangote, ETI and WAPCO. At the start of the week, the bearish trend from the prior week was sustained, as sell pressures in bellwethers Dangote, Nigeria Breweries and Flour Mills dragged the ASI six points lower.
On Tuesday and Wednesday, selloffs persisted with Seplat, Guaranty Trust Bank and Zenith Bank and UBA recording losses.
The decline on Thursday was impacted by losses recorded in medium and large capitalised stocks that included Mobil Nigeria, FBN Holdings, Vitafoam Nigeria, PZ Cussons and Zenith Bank.
Price losses suffered by these blue chip stocks caused market capitalisation to dip further by N21 billion.