Insurance stocks were among the poor performing stocks in in September due to the fact that most insurance company have been resisting change. When banks were recapitalising, insurance companies missed out by not following the trend. As a result the working capital of most insurance companies can not carry the financial depth needed in the market place. A review of their performance show that majority of them recorded price depreciation. Stock market data at the Nigerian Stock Exchange (NSE) showed that insurance equities dominated the losers’ chart with Universal Insurance emerging the worst performing stock.
Universal Insurance emerged the worst performing stock in September in percentage terms with a loss of 42.50 per cent to close at 23k per share. It was trailed by AXA Mansard Insurance with 23.53 per cent to close at N1.95, while Cornerstone Insurance dipped 20 per cent to close at 22k per share. Flour Mills shed 19.35 per cent to close at N20, while Cement Company of Northern Nigeria (CCNN) lost 18.12 per cent to close at N25.30 per cent. Other top losers were Lafarge Africa, Niger Insurance, Royal Exchange Assurance, Japaul Oil and NAHCO.
Consequently, the All-Share Index during the period shed 2,082.08 points or 5.97 per cent to close at 32,766.37 compared with 34,848.45 achieved in August. Also, the market capitalisation which opened at N12.722 trillion lost N760.12 billion or 5.97 per cent to close at N11. 962 trillion. On the other hand, Union Diagnostic was the best performing stock in percentage terms during the period under review with a growth of 30.77 per cent to close at 34k per share. UACN Property came second with 24.20 per cent to close at N1.95, while C & I Leasing increased by 20.80 per cent to close at N3.02 per cent.
Other top gainers were Unity Bank, Regency Alliance Insurance, First Aluminum, Sterling Bank, Veritas Kapital Assurance, Neimeth and AIICO Insurance. In all, the volume of shares traded dropped by 23.15 per cent as investors bought and sold 4.15 billion shares worth N 65. 10 billion in 62,693 deals. This was against a turnover of 5.40 billion shares valued at N66.92 billion traded in 68,906 deals in August.
Commenting on the performance of the market, Prof. Sheriffdeen Tella of the Economics department, Olabisi Onabanjo University, Ago-Iwoye, Ogun, told NAN that the insurance recapitalisation exercise contributed to the losses recorded by some insurance stocks. Tella said the market was largely bearish and was caused by the withdrawal of funds from foreign sources. “The portfolio investment is more often than not dominated by foreign investors who react easily to world prices and withdraw or inject fund at will. There is the need to encourage more local investors, particularly corporate investors like multinationals in telecommunication and hospitality subsectors through some incentives.
“This also has a way of deepening the market, building confidence and making the market more active,” he said. Tella said trading activities would likely be bullish in the current month when compared with September on macroeconomic stability and full implementation of the 2018 budget. Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd. said the peaceful conduct of primary election by the major political parties would likely boost foreign investors’ confidence. Kurfi expressed optimism that the peaceful conduct of primaries would enable foreign investors to predict the direction of 2019 general elections. Also speaking, Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd. , attributed the development to increased sell-off caused by heightening political risk ahead of the 2019 general elections.
Omordion said the political risk seemed outside the control of traders and regulators which made investors to tarry. He added that the tardiness in the implementation of the 2018 capital budget contributed to the loss posted by the market during the review period. According to him, mixed economic data released within the period by the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) contributed to the development. Omordion said the recent decline in the inflation rate to 11.23 per cent in August from 11.14 achieved in July, after 18 consecutive months of steady decline signalled a rise in the price of food items.
Market Statistics Monday, 8th October 2018
Market Cap (N’bn) 11,844.9
Market Cap (US$’bn) 38.7
NSE All-Share Index 32,444.96
Daily Performance % 0.2
Week Performance % (1.5)
YTD Performance % (15.2)
Daily Volume (Million) 120.7
Daily Value (N’bn) 1.3
Daily Value (US$’m) 4.4
