Nestle Nigeria Plc, one of the major fast consumer goods companies listed on the Nigerian Exchange Group Plc (NGX), lost about N199.036 billion at the end of last week, topping the losers’ chart of the stock following sustained sell pressure.
According to entrepreneurng, the consumer goods stock fell by 20.67% to N963.90 per share at the end of the week from N1, 215.00 when it opened the trading week on Monday, November 21st.
Further investigation revealed that Nestle ended the trading week with a market capitalisation of N764.0414 billion, compared to N963.077 billion at the start of the trading week.
Negative sentiment
The decline in Nestle’s share price was due to investors’ negative sentiment, which triggered sell-offs, plunging the stock’s value down. This comes amid a build-up to the 2023 general election and a recent interest rate hike by the Central Bank of Nigeria.
Market operators earlier told entrepreneurng that the decision of the CBN to increase the interest rate by 16.5% could hurt the equities market by prompting investors to navigate towards fixed-income space.
Concerns about the election
CardinalStone Partners Limited analysts believe that the build-up to the 2023 election will deter foreign investors and raise more financial account-related concerns.
In their 2022 mid-year outlook titled ‘Same Challenges, New Shocks,’ the analysts argue that pre-election year concerns and fears of negative pass-through to inflation will likely limit the magnitude of currency adjustment made at the official market in the current year.
According to them, Nigeria, like other emerging and frontier markets, was mostly unappealing to foreign capital providers in H1’22.
They attributed the mood to geopolitical uncertainty and the hawkish stances of global central banks.
In addition to these global factors, they cited a lack of market-reflective FX rates, illiquidity, and a backlog of unresolved foreign exchange demand as dampening investor sentiment.
Despite Nestle’s loss, the NGX All-Share Index and Market Capitalization rose 6.88% this week, closing at 47,554.34 and N25.902 trillion, respectively.
Similarly, all other indices finished higher, except the NGX Oil & Gas and NGX Sovereign Bond indices, which fell by 1.29% and 0.32%, respectively, while the NGX ASeM and NGX Growth indices remained unchanged.
Last week, investors on the Exchange-traded 711.618 million shares worth N15.338 billion in 16,662 transactions, compared to 694.376 million shares worth N8.667 billion traded in 15,418 transactions the previous week.
The Financial Services Industry (measured by volume) led the activity chart with 461.230 million shares worth N3.697 billion traded in 7,653 transactions, accounting for 64.81% of total equity turnover volume and 24.10% of total equity turnover value.
The Conglomerates Industry came in second with 99.881 million shares worth N139.213 million traded in 582 transactions. The ICT Industry came in third, with 37.953 million shares worth N7.577 billion turnover in 1,050 transactions.
Transnational Corporation Plc, AIICO Insurance Plc, and Zenith Bank Plc (measured by volume) accounted for 194.600 million shares worth N1.191 billion in 1,974 transactions, accounting for 27.35% and 7.76% of total equity turnover volume and value, respectively.
