Nigerian Stock Exchange, representing the value of all listed securities took a hair-cut of about N1.87 trillion at the end of the first quarter (Q1) of 2020 due to the raging COVID- 19 crisis.
Investigations revealed that the domestic bourse’s value dropped by N1.87 trillion to close the month of March 2020 at N11.100 trillion from an opening value of N12.970 trillion as at January 2, 2020.
The COVID-19 pandemic also added to the woes experienced by investors culminating in a quarterly loss of 21 per cent, the worst since March 2010 as the All-Share Index (ASI) expressing overall market performance that monitors the general market movement of all listed equities on the NSE, dropped by 21 per cent or 5,541.6 basis points to close Q1 2020 at 21,300.47 points from 26,842.07 points (Jan 2, 2020).
A further review of the market’s performance in Q1 2020, showed that despite impressive earnings and dividend announcements from some firms on the Exchange, the NSE’s sectorial performances were also negative, with all indexes closing the period with declining value.
For instance, the NSE Consumer Goods Index plunged the most by 44.84 per cent while the NSE Banking Index followed with a decline of 30.64 per cent, the NSE 30 index lost 23.03 per cent in value even as the rout took no prisoners and defied whatever fundamentals some of the most capitalized companies could boast of,with bluechips stocks now priced lower than their earnings per share.
Meanwhile, Nigeria’s key foreign exchange earner crude oil, registered its worst quarterly performance in the first 3 months of the year, plunging more than 65 per cent after falling by over 54 per cent in March 2020. Market experts/operators who spoke to Daily Sun on telephone, explained that uncertainties in the domestic and global economy, triggered by the devastating effect of COVID- 19 crisis coupled with the crude Saudi Arabia and Russia oil war continued to pommel the domestic market, which responded negatively to the aforementioned factors.
With the uncertainty in the air, the Senate Committee on capital market, recently said, it was doing all it can to ensure protection of investors’ investment in the nation’s capital market.
Chairman of the Committee, Senator Ibikunle Amosun, during a recent courtesy visit to the Nigerian Stock Exchange (NSE) in Lagos, emphasised that the capital market has a role to play in rescuing the economy at this critical stage in the light of the COVID- 19 pandemic facing global markets.
“The capital market is a potent avenue of deepening our economy. We have always talked about diversification which is essential to growing the economy and that is why the capital market has to play a very significant role in that aspect.
Let me reassure that we will create that enabling environment for investors as well as eke out necessary policies to support the market and so we are urging investors not to press the panic button yet”.
But Chief Executive Officer, Cowry Assets Management, Johnson Chukwu, the COVID- 19 pandemic has completely disorganized every country’s economy no doubt with Nigeria’s capital market not being an exception, adding that the loss is in tandem with what other exchanges have suffered.
Chukwu noted that the coronavirus situation was never envisaged at least to this magnitude because it has been very destructive as about 196 economies has been affected.
“There has been lockdown in more than 90 per cent of the global economy. We have seen situations where no major economic activity is going on and that has affected all the exchanges because the stock price is a reflection of earning prospect of a company and as it stands today, no company can beat its chest and say they are certain that their stocks will do well all throughout the year and so the market has responded likewise to what is going on globally”, He said.
For his part, Managing Director, Decof Investments, Moses Igbrude, explained that investors are playing the cautious card while calling on the government to start priortising its system.
“We are all on lockdown and so there is no way investors would want to spend much considering that no one knows when and how this virus will be tackled and so everyone is holding onto their money while more people are holding back their stocks as well.
Uncertainty is in the air, that was the factor that played a part in the loss. Thus, the government need to be very careful and thoughtful about making decisions that will impact or affect us positively. They need to start proritising their system and not depend on other countries for production of goods and services”, Igbrude said.