Nigeria’s 10 largest companies by market capitalisation lost more than N2.43 trillion in six weeks as global scare caused by the spread of Coronavirus and subsequent crude oil crash fuelled major selloffs in the Nigerian equities market.
Market analysis showed that market value of the 10 most capitalised companies at the stock market dropped from N11.71 trillion on February 03, 2020 to close at N9.28 trillion on March 13, representing a drop of N2.43 trillion.
The 10 most capitalised companies on the Nigerian Stock Exchange (NSE) included Dangote Cement, MTN Communications Nigeria, BUA Cement, Airtel Africa, Nestlé Nigeria, Guaranty Trust Bank, Nigerian Breweries, Stanbic IBTC Holdings, Zenith Bank International and Seplat Petroleum Development Company.
A breakdown indicated that Dangote Cement, the most capitalised company depreciated by N459 billion. MTN, the second most capitalised company, lost N537 billion during the period. BUA Cement, which recently emerged the third largest company, lost N58 billion.
Others included, Airtel Africa, N48 billion; Nestle Nigeria, N654 billion; Guaranty Trust Bank, N323.746 billion; Nigerian Breweries, N215.91 billion; Stanbic IBTC Holdings, N94.02 billion; Zenith Bank, N281.01 billion while Seplat dropped by N35.6 billion.
Benchmark indices indicated average decline of 21.18 per cent during the period. Aggregate market value of all quoted equities also dropped by N3.01 trillion from N14.86 trillion to N11.847 trillion.
Analysts agreed that the steep decline was due to the unabated spread of Covid-19 and the crash in crude oil price occasioned by the crude oil output war between Saudi Arabia and Russia.
“As oil prices struggle to trend upwards amid no respite for the COVID-19 outbreak, we expect sentiment to remain bearish in the next trading session,” Afrinvest Securities stated.
Analysts at GTI Securities stated that the continuing decline was due to anxieties over the “impact of the oil price war between Russian and Saudi Arabia on the Nigeria 2020 budget”.
The Association of Securities Dealing Houses of Nigeria (ASHON), however, allayed fears about the outlook for the stock market, assuring the investing public that the market would soon bounce back.
Although it acknowledged high level of downswing in the market, stockbrokers said the fundamentals of quoted companies remain strong.
Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Oyinyechukwu Ezeagu, explained that the stock market remained part of the global exchanges and as such any development in the global market would impact on its operations.
“The effect of the coronavirus is gradually affecting trading all over the world and whatever happens elsewhere reflects in our market. The centre of it all is China and being a major world power both in productive and consumption capacities, any ill wind affecting China would naturally cause a big sneezing to the rest of world. Investors should not panic. The share prices will bounce back. The companies’ fundamentals remain strong. Many investors are taking advantage of the bearish run to beef up their portfolios,” Ezeagu said.