Nigeria Content Online

The
improved performance at the Nigerian Stock Exchange (NSE), witnessed
since the beginning of the year, could not be sustained in May as
market capitalisation plunged by N123 billion.

NSE
management attributed the drop in equity prices during the month as the
reason why the market capitalisation depreciated. “The rise in equity
prices recorded during the first week of the month could also not be
sustained,” they stated.

The
market value of the 262 listed securities closed at N8.425 trillion,
down by 0.4 per cent from N8.45 trillion recorded in April. The 214
listed equities accounted for N6.37 trillion or 75.6 per cent of total
market capitalisation. The NSE All-Share Index, which opened at
26,453.20 closed the month at 26,183.21. The year-to-date rise in the
index stood at 5,356.04 points or 23.53 per cent. In May 2009, the
All-Share Index rose by 8,209.13 points or 32.94 per cent.

Low returns

Ahmed
Razaq, head of research at Meristem Securities Limited, a stock broking
firm, said low return on investment declared by some companies
contributed to the poor performance of the market. Mr. Razaq, however,
added that the economic challenges facing most of the companies made
them declared low returns.

“Some
industrial companies have device a mode of separating production from
consumption. They can afford to produce elsewhere where production cost
is minimal and then exploit their opportunities in the Nigerian
market,” he said.

He
said companies like Unilever now produce in Ghana due to the steady
power supply there, while they bring their products to Nigeria for
consumption because that is where the major market is. Mr. Razaq said
improved investment horizon will be seen soon in the nation’s market as
a result of the recent passage of the Asset Management Bill and a
clearer political environment.

Turnover volume

The
market recorded a turnover of 8.25 billion shares valued at N76.14
billion in 180,489 deals last month in contrast to a total of 12.6
billion shares valued at N108.31 billion exchanged during April in
206,182 deals. Consequently, trading volume and value depreciated by 35
per cent and 30 per cent, respectively. Trading days in May was 18
compared to 20 in April. In April, trading volume and value rose by 17
per cent and 19 per cent, respectively.

Aggregate
stock market turnover between January and May 2010 were 47.72 billion
shares valued at N376.24 billion exchanged in 1,001,620 deals. In the
comparable period during 2009, the market recorded turnover of 35.11
billion shares valued at N207.41 billion in 684,855 deals. The banking
subsector was the most active (measured by turnover volume) with traded
volume of 3.9 billion shares valued at N36.31 billion while the
insurance subsector was second with traded volume of 1.6 billion shares
valued at N2.0 billion.

The food beverages and tobacco subsector was third with transaction
volume of 389.9 million valued at N8.34 billion while the Mortgage
Companies subsector was fourth with transaction volume of 317.8 million
shares valued at N176.61 million. During the month, 21 subsectors
suffered reduction in market capitalisation of between 0.13 per cent
and 31.11 per cent; 10 subsectors recorded increased market
capitalisation of between 0.45 per cent and 14.84 per cent while 4
subsectors did not record any change. A total of 174 equities out of
the listed 214 were traded in May compared to 175 in April.