Stock performance contradicts positive outlook

Stock performance contradicts positive outlook

The
current market performance at the Nigerian Stock Exchange (NSE)
contradicts the projected positive outlook by some finance analysts.

Resource Cap
Limited, a portfolio management firm, in a report in July, forecast
that “performance at the nation’s capital market in the remaining
trading days of the third quarter of 2010 will be positive following
the signing into law of the Asset Management Corporation Bill.” The
company projected that the market All-Share Index, a measuring
parameter, will end the quarter at 30,000 basis points. Some
stockbrokers had also predicted the same trend for the third quarter.
However, since last week intervention by the Securities and Exchange
Commission (SEC), the NSE has recorded over N173 billion losses. At the
close of proceedings on Wednesday, the Exchange market capitalisation
which plunged on Tuesday by N63 billion further depreciated by N78
billion; reflecting a 1.25 per cent decline while it closed at N6.121
trillion from N6.199 trillion.

The All-Share
Index, yesterday, also shed 1.25 per cent or a loss of 318.89 units
from Tuesday’s figures of 25,350.98 basis points, to close at
25,032.09. A total of 23 stocks appreciated in value, higher than the
23 stocks recorded the preceding day; while 45 stocks depreciated in
value, lower than Tuesday’ 48. A stockbroker, who spoke under
anonymity, said the market may experience more downturn because
“investors are now shying away from the market since no one can predict
the outcome of the SEC independent investigators.” “Stockbrokers and
their firms are also cautious because we don’t know who is next to go,”
he said. The SEC, last Thursday, appointed independent investigators,
Aluko & Oyebode, a law firm; and KPMG, an accounting firm, to
investigate the allegations of financial mismanagement at the Exchange.
The jointly independent investigators have since commenced work.

‘Leadership imbroglio’

Commenting on the
current market performance at the close of Wednesday’s trading,
Analysts at Proshare Nigeria Limited, an investment advisory firm,
said, “The leadership imbroglio ravaging the Nigerian Stock Exchange
continues to have severe consequences on the equity performance. This
would be against expectations from some quarters that the assumption of
the Interim Administrator of the NSE will tame the consequential effect
that would follow; that is yet to be seen.” Meanwhile, they said the
downturn recorded on Wednesday could be attributed mainly to heavier
declines recorded in some blue chip and banking stocks. “We hope to see
the expected positive impact of the reported measures aimed at
restoring investors’ confidence in the market being put in place by the
interim management of the NSE, even as the team solicits for
cooperation of market operators for moving the market to stability,”
they said.

Unaudited results

At the Exchange’s
floor yesterday, Intercontinental Bank Plc presented its financial
accounts to market operators. The bank’s unaudited financial result for
the second quarter ended June 30, 2010 shows a 49.49 per cent decline
in turnover, from N85.065 billion to N42.968 billion. Its profit after
tax also fell by 102.07 per cent from (N109.333 billion) to N2.268
billion. Total net asset for the period in review depreciated by 0.71
per cent, from N380.344 billion to N377.628 billion.

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