Nigerian Stocks slide  13% on Parallel market’s suspension

By Chioma Obinagwam

The downward trend which began on the Nigerian Stock Exchange(NSE) since the beginning of the new year has dragged into week ended January 15, 2016 as Nigerian Stocks shaved 13 per cent off.

The NSE weekly report showed that its all-share index (ASI) and Market Capitalisation depreciated by 13 per cent to close the week at 23,514.04 basis points(bps) and N8.09 trillion respectively.

The current trend has the latest Central Bank of Nigeria’s(CBN) policy to stop sale of foreign exchange(Forex) to Bureau De Change operators(BDCs) as its biggest factor.

The CBN in its bid to strengthen the naira(Nigeria’s legal tender) has embarked on numerous policies, the latest is the stop of Forex sales to BDCs, thereby suspending  activities in the parallel market.

Nevertheless, this move  has failed to achieve its desired objectives, stirring up panic as the naira was reported to have fallen to as low as N300 to a United States(US) dollar.

Reacting to the downward trend, the Chief Research Officer of Invest Data Consulting Limited, Ambrose Omordion stated that Nigerians are obviously over reacting to the issue.

“In Nigeria, we are known to over react to issues. In other climes, they don’t have a parallel market, they only have one market for forex. It is only in Nigeria that you have the Parallel market and the interbank market,”he explained.

” The 41 products that they banned are they producing enough to locally makeup for the ban? They should enough forex in the bank for importers to import,” he advised.

Also, at the end of the week’s trading, the NSE reported a turnover of 1.46 billion shares worth N14.17 billion in 15,164 deals were traded by investors in the week under review compared to a total of 899.60 million shares valued at N7.67 billion that exchanged hands in 14,164 deals in the preceding week.

The report affirmed that the Financial Services Industry (measured by volume) led the activity chart with 1.29 billion shares valued at N8.95 billion traded in 10,020 deals; thus contributing 88.17 per cent and 63.20 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 59.83 million shares worth N3.07 billion in 2,165 deals.

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The third place was occupied by the Conglomerates Industry with a turnover of 56.61 million shares worth N152.95 million in 695 deals.

Again, the report revealed that trading in the shares of Nigeria’s top tier lenders, Guaranty Trust Bank Plc, Zenith International Bank Plc and FBN Holdings Plc.(measured by volume) accounted for 693.44 million shares worth N7.72 billion in 5,960 deals, contributing 47.51 percent and 54.49 percent to the total equity turnover volume and value respectively.

“Similarly, all other indices finished lower during the week, with the exception of the NSE Alternative Securities Market (ASeM) Index that chalked up by 0.07 per cent to close at 1,204.49 basis points,” the NSE stated.

Meanwhile, the summary of price changes on the Nigerian equities market showed that seven  equities appreciated in price during the week, lower than 17 equities of the previous week.

On the contrary, 56 equities depreciated in price, higher than 50 reported the past week; while 127 equities remained unchanged, higher than 123 posted the previous week.