Nigeria’s Equities Market Fall To Lowest In 10-Month
By Olumidagreaton August 11, 2018
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Nigerian stocks hit a 10-month low on Friday, dragged down by losses in the country’s biggest listed firm Dangote Cement and mounting concerns over political risk in the run-up to next year’s presidential election, traders said.
A security officer checks a man outside the Nigerian Stock Exchange in Lagos April 8, 2014. REUTERS/Akintunde Akinleye
The stock market shed 2.9 percent this week, its biggest weekly fall since June 2018. It fell 2.17 percent on Friday after declining for a fifth straight day.
Dangote Cement is one of the most liquid stocks on the Lagos bourse and accounts for around a third of market capitalisation. The company fell 6.1 percent on Friday, its single biggest drop in more than a year and its lowest level in ten months. The reason was not immediately clear.
Reuters reported on Friday that an oil refinery being built in Nigeria by Aliko Dangote, Africa’s richest man, is unlikely to start production until 2022, two years later than the target date, citing sources with direct knowledge of the matter.
In July, Dangote Cement posted a 1.53 percent decline in pretax profit to 77.1 billion naira for the second quarter.
Analysts at FBNQuest Capital said Dangote Cement’s results were weaker than expected in the second quarter, citing that as a reason for the decline.
President Muhammadu Buhari’s re-election bid has become a contentious issue after a faction of his ruling All Progressives Congress last month said it no longer supported him, triggering a wave of defections to the opposition party.
Nigeria’s security forces temporarily stopped lawmakers entering parliament on Tuesday in a blockade seen by the opposition as a bid to intimidate its leaders. Some analysts said it highlighted the potential for a fractious campaign ahead of February’s presidential election.
“Recent events … have raised the level of political uncertainty and hit market activity. Market turnover declined to a 16-month low on Wednesday,” Vetiva Capital analysts wrote in a note. “We do not anticipate much joy for the market until the political terrain settles.”
Political risk also hit bond markets.
Yields on the benchmark 10-year bond is at an eight-month high of 14.21 percent after it rose 130 basis point from its April low of 12.87 percent.
Stocks have fallen more than 20 percent so far after they peaked in January. They rose 42 percent last year.
Rising interest rates by the U.S. central bank has also triggered a capital flight from frontier markets such as Nigeria.
A total of 24 firms declined on Friday with GSK Nigeria down the maximum 10 percent. Sterling Bank shed 8.05 percent, Unity Bank and Lafarge Africa each fell more than 6 percent. Airline services firm Caverton shed five percent while Ecobank fell 4.97 percent.