Pessimism persists on stocks despite passing of N10.8 trn revised budget
Despite the signing into law of the reviewed N10.8 trillion 2020 budget by President Muhammadu Buhari last Friday, which was expected to lift people’s hope of a respite in the stock market, investors have voted with their feet and expressed pessimism that it would help bolster the market.
Market dealers disclosed that the development will be denied the expected ripples in market sentiment and investors’ confidence as the budget is surrounded by many disturbing realities.
According to analysts at Investdata Consulting Limited, ordinarily the revised 2020 budget is expected to add positive momentum and boost economic activities and the stock market, if implemented judiciously.
They noted, however, that the back and forth movement of the government since the outbreak of coronavirus as a result of oil price oscillation, which is pegged at $35 and then $40 for 2021 and 2022 respectively, at production level of 1.86 million barrels per day, is an inimical factor.
“This huge budget is not realistic at this prevailing global economic reset because of fear of resurgence of the virus and our over dependent on sale of oil to run the economy. The worst of it all is the lack of coordination between the monetary and fiscal authorities,” the analysts said.
They also noted that the budget has the propensity to influence the economy positively but on the condition that the implementation style of the government and its agencies must change.
They emphasized that the government must do the needful at the right time especially now that all efforts are geared towards reflating the economy and mitigate the multiplier effect of covid-19 on the economy.
Meanwhile, the stock market closed southward last week, shedding as much as N15 billion to sustain the second bearish week in a row.
Specifically, the key performance index of the market, All-Share Index (ASI) shed 29.76 points or 0.12 per cent to close lower at 24,306.36 basis points while market capitalization followed suit to close at N12.680 trillion.
The index was weighed down by NESTLE, BUACEMENT and DANGOTE that shed -6.5 per cent, -2.5 per cent and-0.8 per cent respectively. Accordingly, the Month-to-Date (MtD) and Year-to-Date (YtD) losses increased to -0.7 per cent and -9.4 per cent in that order. Sectoral performances were negative, as all sector indices except the banking index that appreciated by 5.8 per cent, recorded weekly losses.
The consumer goods index shed -4.0 per cent, marked as the biggest loss, followed by the industrial goods, insurance and oil and gas indices slipped by -2.1 per cent, -0.7n per cent and -0.7 per cent.
Analysts explained that the market performance for the week was mixed as a result of mixed sentiment driven by expectedly disappointing half year results and seeming positive sentiment for interim dividend paying banking stocks.
“Looking at the interim payout of these banks, this rebound wouldn’t last, leading to another dead cat bounce that may trap many players,” analysts said.
A total turnover of 901.542 million shares worth N13.453 billion in 18,676 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 961.833 million shares valued at N9.181 billion that exchanged hands last week in 20,058 deals.
These numbers showed mixed turnover elements as volume traded contracted by 16.27 per cent while traded value of stock rose significantly by 46.53 per cent.
In terms of volume, the financial services industry led the activity chart with 629.368 million shares valued at N5.186 billion traded in 9,887 deals; thus contributing 69.81 per cent and 38.55 per cent to the total equity turnover volume and value respectively.
The ICT sector followed with 59.506 million shares worth N5.161 billion in 684 deals. The third place was the consumer goods sector, with a turnover of 57.136 million shares worth N1.385 billion in 2,993 deals.
Measured by volume, trading in the top three equities of Guaranty Trust Bank Plc, Fidelity Bank Plc and Zenith Bank Plc accounted for 293.678 million shares worth N4.042 billion in 4,334 deals, contributing 32.58 per cent and 30.05 per cent to the total equity turnover volume and value respectively.
A total of 301,094 units of ETPs valued at N2.384 billion were traded for the week in 14 deals, compared with a total of 358,114 units valued at N1.912 billion transacted previously in 25 deals.
Similarly, investors traded a total of 11,487 units of bonds valued at N14.769 million in 13 deals relative to a total of 4,590 units valued at N5.515 million transacted the in the preceding week in 14 deals.