Forex price upsurge weakens market prospects

The recent upsurge of foreign exchange prices in relation to the naira has continued to weaken market prospects as market value and equity prices sustained depressive trend and expected to attain new lows.

Cross section of experts who spoke to Daily Times said that forex volatility not only impacts foreign directors but also local investors who leverage on foreign exchange for economic advancement and other needs.

Meanwhile, while the Naira remained relatively stable at the interbank market, closing yesterday’s session at N305 against the US Dollar, the Naira fell to N499/ per Dollar at the parallel market. Against the GBP and EUR, the local currency remained flat to end the session at N616/£and N530/€ at the parallel market.

The impact of multiple and rising forex, Daily Times findings reveal, continued to impact performances of listed stocks in the Nigerian equities market as they continued on another round of depression targeting a new low, both in market capitalization, All –Share index and equity prices.

The multiplier effect resounded across all sectors of the Nigerian Stock Exchange (NSE) as at the close of trade Tuesday as all indices continued a declining trend, a move cross section of market analysts say would be sustained until a new low has been attained, the losses manifested on the key performance indices, the market capitalization and the NSE All-Share Index (ASI).

For instance, at the close of trade on Wednesday, February 07th 2017, market value closed at N8, 77 trillion, from N8.89 trillion that opened trade for the week, reflecting N117.90 billion losses so far in the week. Also, the ASI closed lower Wednesday at 25,460.45 from 25,802.54 points that close the trade on Friday, reflecting 342.09 points decline.

The market losses were seen by a cross section of analysts as the spiral effect of the renewed wave of the slide in Naira value against foreign currencies. The NSE Premium Index which opened the week’s trade at 1,661.46 closed lower on Wednesday at 1,641.52 points.

NSE Main-Board Index which closed last Friday at 1,140.96 points, depressed further on Wednesday to close at 1,124.91points, while the NSE 30 Index closed lower Wednesday at 1,123.71 points, having opened the week at 1,141.72 points.

The depressive performance on the nation’s bourse showed the rate capital growth of investments is impeded by loses which diminishes earlier gains on capital growth fuelled by equity price rise.

The banking sector was not spared, even as the sector is expected to make announcements of expected corporate actions this quarter, yet performance was subdued by uncertainty in the forex market. The NSE Banking Index opened the week’s trading at 276.17 points, closed lower Wednesday at 274.50 points.

The NSE Insurance Index also of the financial services sector recorded losses in overall performance for the week. NSE Insurance Index having opened the week’s trade at 123.69 points, closed yesterday at 123.63 points.

NSE Oil/Gas Index closed lower on Wednesday at 284.87 points having opened the week at 286.46 points. The NSE Lotus Islamic Index closed lower on Wednesday at 1,656.30 points, from 1,690.32 which opened trading for the week.

The NSE pension index declined to 788.22 points, from 805.73 points which opened trading on Monday, the NSE Industrial Index which opened trade on Monday at 1, 619.41 points, closed on Wednesday at 1,575.59. NSE Consumer Goods Index worst hit by headwinds closed lower at 614.90 points, having opened trading for the week at 632.85 points.

The cumulative loss of N74 billion on Monday and loss of 0.55 per cent by the NSE ASI  on Tuesday as reflected in the market capitalization and index performances subdued investment value of investors’ portfolios in the market, a trend which analysts fear may usher in another round of market apprehension and free fall of equity prices.