Nigeria: Waiting for the storm to blow over

Equities investors await elusive profits
Equities investors had been expecting a sharp recovery in stock after the losses in the first half of the year. That did not happen. They are now beginning to wonder if and when this will happen as bearish sentiments continue. By this time in 2013, the market had gained 29.1% compared to a loss of -0.23% this year. Corporate earnings have paled in comparison to last year. Cadbury, GTBank, Guinness and Dangote have all underperformed their 2013 figures.

The Ebola scare added to the nervousness and anxiety of investors. The macro-economic impact of Ebola on the three smaller economies in West Africa is estimated at $13bn and could be more, if not properly managed. Illustrating the economic impact the disease could inflict on the affected countries, Aliko Dangote, Africa’s richest man and Nigerian cement magnate, pulled some employees out of his plant in Liberia and said one percentage point of growth may be lost in the region this year. Key market indices showed that in August, investors lost $1.14bn, which is $356.37m more than $786.48m lost in July. Average loss in August stood at 1.34% compared with average loss of 0.91% recorded in July.

Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) closed in August at $84.23bn as against the month’s opening value of $85.4bn. The continuing down-trend reduced the average year-to-date gain of investors so far this year to $2.99bn by the end of August compared with $4.14bn in July and $4.92bn in June. Indexed, average year-to-date return dwindled to 0.49%, down from 1.86% and 2.79% in July and June respectively. Investors staked $416.5m on 5.45bn shares through 99,874 deals in August.