Dangote Cement shares record biggest daily loss in three years

Dangote cement Plc. the largest company on the Nigerian stock exchange by market capitalisation, was down some 8.6 percent Wednesday, the biggest daily drop since January 2016, as elevated political risks take a toll on foreign investors’ appetite.

Dangote cement’s slip dragged the equities market lower as the All Share Index, which tracks the average price movement of listed companies, shed 2.33 percent.

“Dangote cement’s share price dip is a blip; as it happened because someone with bulk holdings decided to sell a significant amount of his or her holdings,” said Gbolahan Ologunro, an analyst at CSL Stockbrokers.

“The downward trend is not expected to persist,’’ Gbolahan added.

Analysts say that highly capitalised stocks may be vulnerable as fears among local investors remain elevated.

“The bearish market sentiment could extend to other large caps like Guaranty Trust and Nestle.’’

Another analyst at MBC Securities, Aluko Paul, explained that the decline might be as a result of the negative sentiments of foreign investors.

“Most of the shares of Dangote cement are actually held by foreign investors and the decline in their share price is as a result of these investors withdrawing capital from the Nigerian economy.’’

He further explained that the market may experience busts of rally as bargain hunters take position in the big stocks.

‘’ It is not impossible that in the coming that days Nestle is also affected as a bearish outlook should be maintained for Q1:2019. However, we might see a kind of short rally as bargain hunters would take positions in these stocks.’’

A total of 289,507 units of Dangote Cement Plc shares were trading in Wednesday’s market as opposed to 41,881 units in the previous day.

The increase in volume represents a 591 percent surge as the Value of shares traded equally rose by 566 percent from N7.47 billion on Tuesday to 49.72bn on Wednesday.

Other high caps joined in the rout as Guaranty Trust Bank shed 2.19 percent and First bank holdings went down 1.40 percent to put a downward pressure on the benchmark index.

So far, the market has depreciated 6.66 percent Year to Date with investors losing N780 billion in 2019.

Julius Berger led the advancers with a gain of 10 percent to close at N25.85 while Unilever closed 9.63 percent higher at N37. United Capital, First City Monument Bank and Fidelity each gained 6.87 percent, 6.25 percent and 5.56 percent to join the leaders.

Conversely, University Press lost 10 percent to lead the laggards. Other stocks in the top 5 decliners category include N.e.m Insurance, champion Breweries Plc and Eterna oil and Neimeth Pharmaceuticals.

Across sector performance was bearish as 3 of 5 sectors covered closed in the red. Industrial sector lost 4.35 percent to close as worst performing sector while Insurance and Banking closed on a bearish note with 3.06 and 0.28 percent respectively.

Both Oil and gas and Consumer Goods gained marginally at 0.15 and 0.74 percent at the end of the day’s trade.