Otedola, Adenuga’s firms, 3 others lose N265.4 b in 6 months

Otedola, Adenuga
Otedola, Adenuga

Femi Otedola, Mike Adenga  and three other entities  quoted on the Nigerian Stock Exchange, NSE, lost N265.4 billion in the first half of 2016.

However, other investors on the Nigerian Stock market regained over N314.74 billion in the six months trading as the Year to Date, YtD, return on market value as at 30th June, 2016 appreciated by 3.20 per cent to close at N10.165 trillion from N9.850 trillion it closed on December 31, 2015.

Meanwhile, shareholders of quoted companies reacting to the dwindling performance of the stock market decried neglect of retail investors by regulators of the market.

Otedola Vanguard’s findings showed that Femi Otedola’s Forte Oil Plc recorded the highest loss in investment value as it declined by N181.9 billion, from a capitalisation of N429.8 billion in December, 2015 to N247.9 billion at the end of June, 2016.

Mike Adenuga lost N1.1 billion as Conoil share price plunged. Trailing behind Forte Oil  is Lafarge Africa Plc, which investment value declined by N76.6 billion from N440.9 billion in December, 2015 to N368.3 billion at the end of June 2016.

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The other three firms which investment value dropped substantially include:   MRS Oil Nigeria Plc N3.8 .billion, from N12.6 billion in December 2015 to N8.8 billion in June 30, 2016, followed by CAP Plc which declined by N2.0billion, from N26.3 billion in December 2015 to N24.3 billion in June 2016 and Conoil Plc which declined byN1.1 billion, from N17.2 billion in December 2015 to N16.0 billion in June 2016.

The implication of this drop in investment values is that as share prices of these companies continue to fall, investors’ gains  also fall. Meanwhile, the marginal gain recorded in the half year, according to stakeholders was fuelled by portfolio investors’ sentiments following the introduction of flexible exchange rate by the Central Bank of Nigeria, CBN on June 14, 2016.

 Gainers & Losers

Analysis of market performance during the period showed that  the top five  share price gainers on the NSE for the month of June, 2016 were Nestle Foods Nigeria Plc, which appreciated by N65. 34 to close at N850.00 per share from N784.66 .It was followed by Dangote Cement Plc, which appreciated by N24.99 to close at N192.00 per share from N167.01 per share.

Others are Totalfinaelf Nigeria Plc, which garnered N20 per share to close at N190 per share from N170 per share, followed by Julius Berger, which rose by N7.43 per share to close at N50.93 from N43.50 per share and Guinness Nigeria Plc went up by N4.93 per share to close at N109.25 per share FROM 104.32 per share.

On the losers’ chart, Seplat Petroleum Development Company Plc recorded the highest loss of N30.00 per share during the six months period, from N360 per share to close at N330 per share, followed by Forte Oil Plc which depreciated by N5.56 to close at N190.34 per share from N195.90 per share. Trailing behind Forte Oil was Lafarge Africa Plc , which dropped by N3.06 per share to close at N73.51from N76.57 per share.

Others are Fortis Microfinance Bank Plc, which nosedive by N2.57 per share to close at N2.58 per share, and CAP Plc that declined by N2.12 per share to close at N43.68 per share.

Shareholders react

Commenting on the half year performance of the Nigerian stock market   ended June30, 2016, the Chairman, Progressive Shareholders Association of Nigeria, PSA, Mr. Boniface Okezie said “The first half that just ended is not impressive.

The marginal gain that was recorded occurred in June when the flexible foreign exchange was introduced. It was the institutional and portfolio investors that buoyed the market. It was not sustainable as you can see that the prices have started dropping.

This category of investors are not interested in the development of the market and the economy. These are investors that just take advantage of the falling prices and when the price rise, they just offload and make their profit and leave.”

Continuing he said “The retail investors are not playing in the market as you can see; the incentives to attract them are not there. The regulators are not doing anything. There is liquidity crisis in the market and people do not have the cash to invest.   The federal government is yet to release money into the economy and purchasing power has really gone down with high inflation. Many contractors and civil servants are being owed and unemployment is on the increase.

So these are some of the problems killing the market. The flexible exchange rate policy has just opened a way for foreign investors to bring their money and buy cheap stocks and repatriate their returns. They are not the real investors that will grow the market and that is where the regulators are getting it wrong. I do not see much difference in the remaining second half of the year unless proactive measures are taken to address some of these anomalies.”

In his own reactions, the National Secretary of Independent Shareholders Association, ISAN, Mr. Adebayo Adeleke said “The slight change we witnessed in the first half of the year was recorded in June following the introduction of flexible exchange rate policy by the CBN. It is the sentiment by  institutional investors and high net worth investors that spike the market and the previous losses was wiped out. So, you can see that the gain is marginal.”

Continuing, he said “Not much expectation has been experienced in the market, there is still market apathy by retail investors that has been neglected by regulators. The market is not likely to record much gain as nothing significant at the moment to push the market. In fact, the retail segment of the market should be looked at as they are the ones that can develop the market to sustainable level.” Speaking as well, the Chairman, Renaissance Shareholders Association of Nigera, RSAN, Ambassador Timothy Olufemi said: “The stock market in the half year did not interest retail investors. The regulators have their own agenda, which is not in tandem with us the retail investors. The regulators target is on foreign investors, they go for road show abroad and never organise anyone in the country.

The confidence has not yet really returned as foreign investors just come in to trade, make profit and disappear. The federal government should encourage the capital market to grow. The infrastructural gap should be financed through the capital market, the idea of going to borrow aboard should be limited. Government is just helping the capital market of the developed economies, while its own is left to crumble.

The market at the moment is not reflective of the economy.   More of public entities should be taken to the public and listed on the NSE.

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