Nigerian shares fell for the sixth session on Monday as the absence of new policies to tackle an economic crisis facing Africa’s biggest economy continued to unnerve markets nearly two-weeks after ministers were sworn in, traders say.
The stock market, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, shed 1.02 percent on Monday on thin volumes taking year-to-date losses to 19.8 percent. Shares fell to a 2-1/2 month low last week.
President Muhammadu Buhari swore in his cabinet on Nov. 11, five months after he took office, but work may not get under way until early next year as the country comes to a halt for a Christmas break in mid-December, analysts said.
Stock market daily turnover hit a three-year low on Friday trading $5.3 million a day, compared with around $20 million a day on average last year, as investors stayed on the sidelines awaiting clarity over policies, one trader said.
“We believe that this trend will continue unless we see a clear cut policy on exchange rate. From all indications foreign investors are unlikely to come back until there’s clarity,” said Ayodeji Ebo, head of research at Afrinvest. Share dealing in September fell to 129.92 billion naira, down 75.2 percent from a year ago, the stock exchange said as foreign investors, worried about currency risks, stayed away.
Sub-Saharan Africa’s second biggest stock index soared 12.2 percent in the two sessions after Buhari won the presidential election in March but a five-month wait for the 72-year-old former military leader to form a cabinet has added to strains.
The central bank on Monday cut dollar supply to bureau de change operators in a bid to conserve its foreign reserves, causing the naira to fall more than 2 percent on the parallel market. Ebo said investors were pricing in the weak economic fundamentals into share prices as well as lower corporate earnings as they trail the economy, which worsened the losses.
The index of Nigeria’s top 10 banking stocks shed 2.26 percent on Monday while the consumer goods sector index fell 1.96 percent to add to losses on the overall bourse.
Top decliners include Guinness Nigeria down 4.99 percent, Nigerian Breweries (NB) and Wema Bank both down 4.17 percent.
Omolara Adegoke- Abuja
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. We also authorize the copying and usage of parts or the whole of this publication as long as Credit is given to thebreakingtimes.com and other mentioned sources