CBNs regulatory policy changes INVESTORS in the nations capital market have in the last one week watched with baited breath, as the value of their investment portfolio depletes owing to sale pressure in virtually all the listed sub-sectors in the market.The rush to sell shares is coming on the heels of investors seeking to engage in asset re-allocation, which they think could, in the main time, bring them the much needed return on dividend following the hike in the benchmark rates by the Central Bank of Nigeria (CBN) to 6.5 per cent penultimate week.The rate at which volumes of shares are being exchanged for money has further eroded most of the gains the market recorded in the last one month transaction occasioned by the Nigerian Stock Exchange (NSE)`s two-hour extension to allow for more international market participation on the domestic market.For the five trading days, last week, results showed that the All-Share Index was in bearish outlook recording negative trends in three of the five trading days.The market capitalisation, the second twin market performance indicator, also dipped due to the slide in the prices of blue chips that used to raise indices in the market; it depreciated to N8.55 trillion at the close of transaction on Friday.Analysts in the stock market linked the deepening misfortunes of the capital market to expectations of higher yields in the money market following the decision by the CBN to tighten monetary policy previous week.It will be recalled that the interest rates at which banks lend to one another in the inter bank market have been on the consistent rise since Wednesday, January26, 2011, signalling a strong indication, according to analysts, that interest rates at which borrowers will be given loans are set to rise.The CBN, at its last monetary policy committee meeting previous week, increased the Monetary Policy Rate (MPR) - the rate the CBN lends money to banks - from 6.25 per cent to 6.5 per cent. The CBN had also increased the Cash Reserve Ratio (CRR) the proportion of deposits banks must keep with the CBN as cash from 1 per cent to 2 per cent.With this new development coming from the apex market regulator, cost of borrowing from banks will rise even as the lending rates that oscillates between 22 per cent and 23 per cent, are expected to rise to between 25 per cent and 28 per cent, thereby compounding credit freeze currently being experienced by manufacturers.Investors earlier worryTransaction in the week further confirmed experts belief that, there is still more lack of commitments on the side of investors even as the lull in activities could also be traced to profit takings and portfolio restructuring by the investors.The bearish trend in the market started on Wednesday January 26, following the fall in market capitalisation and the All-Share Index which closed the day at a value of N8.875 trillion and 27,769.52 basis points respectively.The trend in the week further indicated that most investors are yet to come to terms with what the equities market really stands for. It is market for investors who are expected to invest their money for a long gestation period.Just like other clime, investors put their money for a long period while savouring the dividend and capital appreciation that usually accrue from such investment. Other crop of investors who form majority of the common investors usually use investment in the stock market as a shock absorber after retirement from active service. Investors share trade in volume terms Transaction volume closed the week on a low note when compared with the figures recorded at the close of trading previous week. As usual, banking sector emerged the most traded sector with 1.31 billion units valued at N11.317 billion exchanged in 18.750 deals. Transactions in the shares of Zenith Bank Plc and First Bank Plc largely boosted the volume traded in the sector.All four sectorial indices depreciated during the week compared with two that so depreciated during the preceding week. The NSE Food/Beverage Index depreciated by 12.81 points or 1.49 per cent to close at 849.09, the NSE Banking Index depreciated by 4.29 points or 0.91 per cent to close at 439.17, the NSE Insurance Index depreciated by 0.88 points or 0.46 per cent to close at 185.41 and the NSE Oil/Gas Index depreciated by 3.4 points or 0.9 per cent to close at 358.72. Please note that the points and percentage changes in the NSE Indices are calculated by computing the daily changes in the index values.Notwithstanding the bearish outlook of the market, investors are enjoined to look out for the valued stocks which prices have declined as the present negative outlook in the market may not last, most especially considering some of the positive developments in the market.A review of transaction in the market last week showed that Guinness Nigeria Plc suffered most in terms of depreciation, the stocks of the company dipped by -2.42 per cent. Nigerian Breweries followed closely -5.21 per cent while Total Nigeria, Flourmill Nigeria and Dangote Cement ended the five top losers with -2.88, -5.28 and -4.98 per cent respectively.A comparative analysis of the market with the previous week revealed that the market dipped by N190 billion or -2.17 per cent.The weeks activities The market opened on Monday on a bearish note for investors as the market capitalisation dropped 1.96 per cent or N1168 billion while the index fell by the same margin of 1.96 per cent or 525.92 points. A review of transaction in the day showed that while the market capitalization of equities depreciated by N168 billion or 1.96 per cent to close at N8.575 trillion, the All-Share Index equally shed 1.96 per cent or 525.92 basis points to close at 26,830.67 index points in contrast to 27,356.59 opening index.Price movement analysis in the day showed that 16 stocks recorded price appreciation while 50 others shed value. Seven-Up led the percentage gainers table with a gain of five per cent to close at N40.95. Berger Paint followed with a gain of 4.95 per cent to close at N9.97 while Honeywell Flour Mills added 4.94 per cent to close at N6.59, among other gainers.On the downward side, UBA, ABC Transport and Guinness led the percentage losers chart with a loss of five per cent each to close at N10.45, 76 kobo and N203.35 respectively. Oando followed with a loss of 4.97 per cent to close at N68.52 while Premier Paints shed 4.95 per cent to close at N12.10 among other losers.Banking sub-sector maintained the most active in terms of volume with a turnover of 208.3 million shares worth N1.8 billion in 3,275 deals. The sector was boosted by the activities in the shares of UBA, First Bank and Zenith Bank.Insurance sub-sector buoyed by the activities in the shares of AIICO Insurance and NEM Insurance followed with a turnover of 14.3 million shares valued at N15 million in 230 transactions while Food and Beverages sub sector strengthened by the activities in the shares of Dangote Flour Mills and Flour Mills Plc ranked third with a turnover of 9.7 million valued at N376.9 million in 532 deals.On the whole investors staked a turnover of 282.7 million shares worth N3.1 billion in 5,768 transactions. Tuesday also recorded another fall in investors wealth in the market as performance indicators dipped yet again by N30 billion or 0.35 per cent while the index fell further by 0.39 per cent or 107.18 points. The not-so- much disparity in the twin market indicators as seen from Monday and Tuesday readily showed that there was no introduction or listing of new shares in both days.A review of trading yesterday showed that 16 companies appreciated in price compared to 39 that suffered depreciation; the All-share index dropped by 107.18 basis points or 0.39 per cent from 26,830.67 recorded on Monday to 26,723.49 while market capitalization fell by N30 billion from N8.575 trillion to N8.541 trillion.On the gainers chart, Airservice led others on the gainers chart with 4.98 per cent while Neimeth Plc followed with 4.96 per cent per share. Afromedia featured with 4.84 per cent per share while Guaranty Trust Bank garnered 4.42 per cent per share while Dangote Flourmill rose by 4.13 per cent in the days transaction. However, Royalex Plc led the losers table with 5.00 per cent per share while UBA Plc followed with 4.98 per cent per share.African Petroleum, Presco Plc, Dangote Sugar Plc lost by 4.96 per cent, 4.94 per cent and 4.94 per cent respectively. The banking sub-sector remains the most active stock in volume terms with 242.4 million shares worth N2.104 billion while the insurance subsector trailed with 27.1 million units worth N47 million. The foodbeverages & tobacco subsector ranked third with 14.8 million shares worth N573.9 million.Transactions in the shares of Guaranty Trust Bank boosted activities in the banking subsector with 29.9 million shares worth N575.8 million while Zenith Bank followed with 29.9million units worth N454 million. The insurance sub-sector was buoyed by activities in the shares of Custodian insurance with 9.7 million shares worth N31.4 million.On the whole, investors exchanged 330.4 million shares valued at N3.28 billion in 6,349 deals. Investment in shares on Wednesday closed on a bullish trend as the market capitalization appreciated by N66.5 billion to close at N8.607 trillion while the All share Index gained 0.7 per cent to close at 26,928.67 index pointsDiamond bank, fidelity bank and spring bank led the gainers chart with 5 per cent to close at N8.61, N3.15 and N1.89 respectively. Access Bank followed with 4.95 per cent to close at N10.60, United Bank for Africa added 4.93 per cent to close at N10.42 while the Ecobank Nigeria rose by 4.88 per cent to close at N4.30.On the other hand, long man Nigeria, Niger Insurance and Wapic topped the losers chart with 5 per cent to close at N7.60, 95 kobo and 76 kobo respectively. Poly Products lost 4.97 per cent to close at N1.53, Premiere Paints depreciated by 4.96 per cent to close at N11.50 while United Nigeria Textiles dropped by 4.82 to close at N79 kobo.A further review of activities in the day showed that the banking sub-sector was the most active with a turnover of 249.237 million valued at N2.234 billion in 4,063 deals. Zenith Bank led the banking stock with a turnover of 39.526 million valued at N621.749 billion in 543 deals, Guaranty Trust Bank and United Bank for Africa followed with a turnover of 6.774 million valued at N253.931 billion in 349 deals.On Thursday price losses outweighed gains as major blue chip stocks suffered price depreciation, causing market capitalisation to depreciate further by N11billion. 30 companies depreciated in price in days transaction compared with 29 that constituted the gainers table, while the All-share index fell by 33.31basis point or 0.1per cent from 26,928.67 recorded on Wednesday to 26,895.35 the market capitalisation slide by N11billion from N8,607trillion to N8,596trillion.On the activity chart, the banking subsector remains the most active stock in volume terms with 353million shares worth N3.4billion in 3,983deals. The foodbeverages subsector followed with 20million units worth N404million in 540deals. The insurance subsector featured with 10million units valued at NN11million.On the whole, investors exchanged 443.8million shares worth N4.6billion in 6,820deals. The market closed the week on Friday further on a depressed note, as both market twin indicators, the market capitalisation and the All-Share Index slide by N42 billion and 131.151 basis points.
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