Nigerian stocks and shares fell for the sixth session consecutively 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.
The stock market, 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.
Stock market daily turnover hit a three-year low last week, $5.3 million a day were traded, compared with around $20 million a day on average last year, as investors stayed on the sidelines awaiting clarity over policies.
It is believed that this trend will continue unless there is a clear cut policy on exchange rate. From all indications, foreign investors are unlikely to come back until there’s clarity.
Share dealing in September fell to 129.92 billion naira, down 75.2 percent from a year ago, as foreign investors, worried about currency risks, stayed away.
Nigria’s 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 of Nigeria (CBN) today 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. It appears 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.