12 September 2018 : The prolonged bearish sentiment in the equity market is eroding its Investor’s wallet day after day.

The investors did all the study and reasearch, invested in the the right firms with the hope that their investments would appreciate, but the downward spiral of the stock market has left the investors and consumers agonized and depressed.

Because the political instability was not enough, the “MTN and Banks” saga added to the whole negative drama, resulting in the equity market having to face the brunt of all this. To an outsider it might seem like a very entertaining TV show with a lot of drama and suspense, but to the people involved, it is just one big horror show, which is just getting scarier with each passing day.

2018 has officially surpassed 1998 as the “worst pre-election year, stock market wise”. In 1998 the worst YTD decline observed was 11.98%, and 2018 boasts of a YTD of - 12.54% so far, keeping in mind that we still expect choppy waters ahead, thus further declines are inevitable. 

The MSCI frontier market index lost about $81 billion, and interestingly Nigeria is one of the biggest contributors, accounting for about $ 9.38 billion ( 11.59% ) of the total losses.

2018 has been a rather peculiar year, with the equity market reaching its peak in January, the market has fallen by 25.82% since then . Theoretically, the market has officially entered the Bear tenor and hence is wincing in pain after the royal plummeting.

Investors have lost N 16.5 billion on an average per day since Jan 19, this coupled with stagnation of wages has put an extensive strain on consumer spending.

The Nigerian market has been hit by a bolder thanks to the foreign investors (accounting for 49.47% of the total stock market holding ) selling down the Nigerian equities depleting the external reserves rapidly.The reserves are now hanging by a thread made by the rally in the crude oil prices which provided enough foreign exchange earnings to save the reserves from completely falling off the bandwagon.

This oil buffer is what has helped CBN so far to defend its currency in this tit-for-tat trade war causing a massive sell-off in EM and frontier market currencies. Although Naira has remained stable so far in this time of pressure, it is unlikely to predict how long the CBN will be able to save the currency, after the currency already has a history of depreciation. The external reserves are already showing financial curtailment following a $ 1.72 billion drop in reserves between July’18 and Aug’18.

The three leading stock markets in Sub-Saharan Africa are sailing in the Titanic, with NSEASI losing 12.5% YTD, Nairobi ASI losing 6.07% YTD and Jo’berg gaining mere 2.4%. 

Yesterday the 3.1% drop by NSEASI was the largest drop since Mar’18. Nigeria’s top tier lenders are looming below tangible book value per share except GTBank. 

FBN Holdings trades at 0.48xs book value, Access Bank at 0.55xs, ZenithBank at 0.52xs and UBA at 0.57xs, However GTBank trades at a book value of 1.93xs.

The YTD results of the tier-one Banks are shocking: ZenithBank reports YTD loss of 23.25%, UBA boasts of - 28.43% YTD, GTBank has -19.85% YTD, FBNH has - 0.11% YTD and lastly Access has -22.17% YTD.

Because, of the major Bungee Jump of the stock yesterday, the market cap fell by N 12.2 trillion, which placed the market at a 14-month record low. This fall was fueled by the plunge in ( NB ), ( GUARANTY ) , ( DANGSUGAR ), ( FO ) and UAC of Nigeria Plc.

Reporting for EasyKobo on Wednesday , 12 September 2018 in Lagos, Nigeria