Political anxiety has continued to spark volatility and induce sell-offs on the equity sector of the Nigerian Stock Exchange (NSE) as virtually all the major blue chips depreciated in price, causing the market capitalization to slip further by N102 billion in four consecutive trading sessions.

This can be attributed to the recent invasion of the National Assembly by operatives of the Directorate of State Services (DSS) who took over the complex, brandishing guns and wearing masks to deny federal lawmakers, journalists and staffers of the National Assembly from having access to the building.

Specifically, at the close of transactions on Thursday, the All-Share Index (ASI) shed 67.16 basis points, representing a decline of 0.19 per cent to close at 36,232.66 points, falling by 5.1 per cent so far this year, after climbing 42 per cent last year while the market capitalization lost N22 billion to close at N13.228 billion.

Accordingly, the Month-to-Date and Year-to-Date losses moderated to -2.12 and -5.26 per cent, respectively while second-quarter earnings have been mixed, with most banks posting declines in loan growth, citing a weak economy with several consumer goods companies recording lower profits.

Consequently, the Insurance (-1.24 per cent), Oil & Gas (-0.68 per cent), and Banking (-0.12 per cent) indices closed negative, following selloffs of LINKASSURE (-10.00 per cent), JAPAULOIL (-10.00 per cent), and FBNH (-4.52 per cent) shares, respectively.

On the flip side, gains in International Breweries (+1.64 per cent) shares, led to upturn in the Consumer Goods (+0.09 per cent) index, while nil return was posted in the Industrial Goods index.

Newly-listed fertilizer firm Notore Chemicals Industries Plc reported a wider loss before taxes for the nine months to June even as its shares dropped 8.8 per cent in the week after listing.

However, the total volume and value of trades rose by 65.09 and 76.85 per cent, to 188.26 million shares and N1.29 billion, respectively, traded in 2,795 deals.

Transaction in the shares of UBA topped the activity chart with 27.219 million shares valued at N260.23 million. Law Union followed with 25.000 million shares worth N22.500 million, Zenith Bank sold 19.91 million shares valued at N471.38 million while Courtville transacted 19.69 million shares worth N3.04 million.

Last week, the Senate President, Dr Bukola Saraki, Nigeria’s third most senior elected official, defected from the ruling All Progressive Congress (APC) to the main opposition, leading to the argument from market analysts and stakeholders that if the political space remains tensed, the volatility recorded so far will be heightened and as well as affect the slope of the market.

Analysts at Cordros Capital Limited said, “In the absence of a positive one-off catalyst, as well as brewing political concerns, we guide investors to trade cautiously in the short to medium term. However, stable macroeconomic fundamentals remain supportive of recovery in the long-term.”

Speaking to Sunday Sun on telephone, the Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, explained that the current situation has affected the price of stocks, added that the economy might be bereft of foreign investments until after the elections.

Chukwu argued that foreign investors will not be bullish in investing in the current unstable environment, rather they will remain on the sidelines to watch the development in the political space.

On his part, Co-founder, NSSA, Alhaji Gbadebo Olatokunbo, described the political uncertainties as a temporal situation and urged investors not to panic.

According to him, “the economy is going as it should as it does not affect government policy and so there is simply no need to panic. Those who are not used to the Nigerian climate of politics will come back when they discover it was simply a masquerade dance of some politicians.”

•Excerpted from a Daily Sun report

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