Rising COVID-19 Cases, Weak Economy Take Toll On Stock Market

The increasing number of coronavirus, (COVID-19) cases and the consequent weakening of the nation’s economy have taken the Year-to-Date, YtD, loss to investors in the Nigerian Stock Exchange to -9.5%.

Return on investment represented by the Nigerian Stock Exchange, NSE, market capitalization, fell to N12.7 trillion at the close of trading on Friday with investors losing N9.8 billion during the week.

However, analysts have continued to caution investors to patronize stocks with strong fundaments following the risk element propelled by the COVID-19 pandemic and weak purchasing power.

Commenting on the market performance, analysts at Cordros Securities Limited said: “In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.”

In their own comments, analysts at Afrinvest Securities Limited said: “In the coming week, we expect market performance to improve on bargain hunting activities.”

Analysts at Cowry Asset Management said : “In the new week, we expect the domestic equities market to appreciate as investors take advantage of some fundamentally sound stocks with good dividend yields.

“Nevertheless, we advise our clients to trade cautiously amid anticipated first half, H1 2020 financial reports which we feel will show mixed performance.”

Meanwhile the analysis of the market showed that another stock market gauge, NSE All-Share Index, ASI declined on three of the five trading days – Monday (-44 bases points, bps), Tuesday (-34bps) and Friday (-17bps) – with gains only on Wednesday (6ps) and Thursday (82bps).

Losses in Nigeria Breweries, NB (-11.9%) and banking stocks dragged down the index, and offset the gains in Airtel Africa (5.9%), MTN Nigeria (1.6%) and BUA Cement (1.2%).