Highly Priced Stocks Depreciate On NSE

Following the decline in the equities market indicators, 13 most highly priced stocks have witnessed weakening performance in the Nigerian Stock Exchange (NSE).

In 2012, with the roll out of market making, the NSE introduced a pilot programme under which stockbrokers could move prices of highly priced stocks with 10,000 shares and these stocks must have traded an average of N100 or more per share in four out of the last six months period.

The withdrawal of foreign investors in recent weeks have signalled sell-off in NSE’s most highly capitalised stocks, bringing the NSE All-Share Index to 33,228.29 basis points, shedding 19.60 per cent from 41,329.19 basis points it opened this year.

The Nigerian bourse had listed Dangote Cement Plc, Guinness Plc, Mobil Oil Nigeria Plc, Total Plc, Nestle Plc, Nigerian Breweries Plc, SIM Capital Fund, Skye Shelter Fund, and Nigerian Energy Sector Fund (NESF) as highly traded stocks. Others include Seven-Up Bottling Company Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and Forte Oil Plc.

Stockbrokers said that most of the highly traded stocks are multinational companies with foreign investors’ interest and slim numbers of domestic investors holding their stocks for long-term investment. For example, the share price of Dangote Cement Plc closed on December 5, 2014, at N170.00 per share after attaining a price of N250.02 this year. Investors had thrown caution to the wind following a 41-per cent reduction in the prices of Dangote cement, with the different grades of the essential commodity now selling for between N1,000 and N1,150, exclusive of value added tax (VAT).

Investors, this year, had bought Guinness Plc shares at N260.00 per share which closed on December 5, 2014, at N149.06 per share. Two petroleum marketing companies, Mobil Oil Nigeria Plc and Total Nigeria closed last week at N165.00 and N162.00 respectively, a decline of 9.3 per cent and N17 per cent from N182 and N195.5 highest price traded so far in 2014.

Nestle Plc, food products company with the high share price at the Nigerian equities market dropped to N800.01 from N1,200.00 per share while Nigerian Breweries Plc share price stood at N170.99 as against N189.00 high price traded this year.

SIM Capital Fund remained stable at N103.24 per share, while Skye Shelter Fund and Nigerian Energy Sector Fund also maintained year high at N100.00 and N552.20 respectively.

Further investigation indicated that Seven-Up Bottling Company Plc share price rose to N188.52 high as against N 152.70 it close on December 5,2014. The same decline in share price was recorded in Lafarge Africa Plc from N136.73 per share high to N78.00 in the period under review. As the crude oil price at the international market continued to drop, the share price of Seplat Petroleum Development Company Ltd has dropped to N380.00 per share, N720.50 per share high traded this year. Furthermore, the share price of Forte Oil Plc had recorded N259.94 high in 52-week trading at the NSE, closing on the December 5, 2014, at N223.99 per share.

According to a broker with Calyex Securities Limited, Mr Tunde Oyediran, the high priced stock dominant market activities and any swing in their prices determines the direction of the market in a particular trading.

“With particular reference to Dangote Cement, any changes in price of the stocks affect the direction of the market. That is why sometimes you have many price gainers but if Dangote Cement or many of the other companies are among the losers, the market will close negatively,” Oyediran said.

A shareholder, Mr Akinfemiwa Dayo, said, “With all indications, companies trading at high price will continue to drop as foreign investors are staying away from the capital market following the 2015 general elections.

“As you know, most of the domestic investors cannot avoid to buy those shares right now because of festive period and other development in the country right now.”

Source : Leadership

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