Stocks record lowest turnover since May as forex crisis deepens

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According to the Nigerian Stock Exchange, stocks recorded a total turnover of 856.289 million shares worth N10.752 billion in 15,663 deals in the week ended September 17th, 2021. This is in stark contrast to the 1.426 billion shares valued at N13.073 billion traded the previous week in 19,315 deals.

However, data from Nairametrics suggests that it is the worst week for stocks since the week ended May 14th in terms of volume of stocks traded. Nigeria ended a tumultuous week that saw the exchange rate at the parallel market depreciate above N570/$1 for the first time ever leading to a scathing attack of forex tracking platform abokiFX by the central bank. The apex bank is accusing the website owner of engaging in suspicious activities tantamount to price-fixing and mentioned that it was concluding its investigation soon, which it will make public.

It however appears that the exchange rate situation may have affected stock market trades during the week as investors reduced participation this week compared to the week before. Another plausible reason for the limited participation could also be due to the massive Eurobond sale by Access Bank which was oversubscribed.

The offering achieved the lowest (outstanding) Nigerian bank Eurobond coupon, supported by a more than 3x oversubscribed orderbook of over $1.6 billion, which represents the largest orderbook ever for a Nigerian bank Eurobond transaction. The bond which will mature on the 21st of September 2026, was issued with a yield and coupon of 6.125%, with interest payable semi-annually in arrears. The coupon of 6.125% is another first in the corporate Eurobond issuance space.

The bond is already trading at a premium from issue levels with bids around 5.89% levels whilst offers are around 5.78% as the unmet demand from the auction filtered into the secondary market. (101/101.50 indicative price).

Investors have tilted towards fixed income securities in recent months preferring them over stocks as the struggling economy heightens investment risks for equity portfolios. Recent results by some of Nigeria’s largest banks have also been a challenge for investors who have seen profits decline amidst lower net interest margins and rising non-performing loans.

Despite the lower volumes of trade, stocks ended the week on a positive note gaining 0.06% with 21 stocks gaining compared to 25 last week. However, more stocks lost ground with 38 equities depreciating in price compared to 34 the week before. During the week, Access Bank and Zenith Bank had their stocks marked down for dividends after proposing 30 kobo respectively.

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