By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-Nigerian equities on Tuesday declined 2.1 percent in early trading ending a 10-day rally as election tensions eases, a Reuters report quoted stockbrokers as saying.
While Bloomberg reported the Nigerian Stock Exchange All Share Index (NSE ASI) dipped the most since March 16 on Tuesday. According to Bloomberg, ten straight days of gains has pushed the gauge above the threshold that signals to some investors that an asset is overbought.
It said the measure rallied 15 percent in the four days after the March 28-29 vote to erase losses for 2015.
The report quoted Thabo Ncalo, money manager at Stanlib Asset Management Ltd., from Johannesburg as saying that “Some of the headwinds in the economy are still there. Now that we’ve had the good news, everyone is sitting down and looking at valuations.”
According to the report, the price of oil, the nation’s main export and biggest source of government revenue, has dropped almost 50 percent since June. The International Monetary Fund (IMF) estimates economic growth will slow this year to 4.8 percent from 6.1 percent in 2014.
Bloomberg reported that as at 12:12 pm, all-share index declined 2.2 percent to 34,953.71 by at the Nigerian bourse as 37 shares declined, 10 rose and 134 were unchanged. “The gauge’s 14-day relative-strength index, which rose to the highest since February 2013 on April 2, decreased to 75.7 on Tuesday. A level above 70 may indicate to technical traders the measure was overbought,’ the report added.
The report affirmed that lender, Guaranty Trust Bank Plc (GTBank), led decliners, falling 8.1 percent to N29.03, while first listed oil and gas upstream firm, Seplat Petroleum Development Company Plc. Dropped five ( 5) percent to N421.80 as prices for Brent crude decreased 0.7 percent to $57.70 a barrel.
In the same vein, the report added that Nigeria’s economy is also facing a weaker currency, with the naira down more than 17 percent against the dollar in the past six months.
It further affirmed the naira faces the prospect of a sell-off when the Central Bank removes trading restrictions imposed last year to reduce volatility.
The naira was unchanged at 199.05 per dollar. Yields on $500 million of Nigerian bonds due July 2023 fell 6 basis points to 6.01 percent, the lowest on a closing basis since December 8, the Bloomberg report added.
