Moody downgrade: NSE market indices drop further by 0.91%


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The market indices of the Nigerian Stock Exchange (NSE) for the second consecutive day on Wednesday lost 0.91 per cent due to investors reaction to Moody downgrading of some companies.

The News Agency of Nigeria (NAN) reports that the market capitalisation which opened at N12.789 trillion, shed N116 billion or 0.91 per cent to close at N12.673 trillion.

Similarly, the All-Share Index lost 335.96 points or 0.91 per cent to close at 36,617.45 compared to 36,953.41 posted on Tuesday.

NAN reports that the market capitalisation lost N240 billion in two days to close lower at N12.673 trillion when compared to N12.913 trillion posted on Monday.

Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., attributed the market development to investors’ reactions to the recent Moody’s downgrading of the Nigeria sovereign bond and some financial institutions due to risk exposure.

Omordion said that the pullback would not likely last long due to strong fundamentals of companies on the exchange.

He stated that Nigeria stocks retained in the main MSCI index should be investors’ attraction now.

Omordion said that investors were selling the stocks that were reclassified to low market index and the ones that were deleted from the MSCI index to reenter later at cheaper price.

NAN reports that Moody’s Investors Service (Moody’s) on Nov. 10 downgraded to B2 from B1 the long-term local currency deposit and issuer ratings of four Nigerian banks.

The banks were Access Bank, Guaranty Trust Bank, United Bank for Africa (UBA) and Zenith Bank and the long-term local and foreign currency issuer ratings of Bank of Industry, a Nigerian development bank.

Moody’s also downgraded to B3 from B2 the long-term foreign currency deposit ratings of Access, GTBank, UBA and Zenith, as well as those of Union Bank of Nigeria, First Bank of Nigeria Limited and Sterling Bank Plc.

Concurrently, Moody’s downgraded the baseline credit assessments (BCAs) of Zenith and GTBank to b2 from b1.

NAN reports that the primary driver of the rating action, according to the global rating agency, was the weaker capacity of the government to provide support to banks, in case of stress, as reflected in the downgrade of the sovereign issuer rating to B2 from B1.

An analysis of the price movement table indicated that Guinness led the gainers’ table for the day, gaining N1 to close at N101 per share.

Guaranty Trust Bank followed with a gain of 94k to close at N42.50 and International Breweries appreciated by 45k to close at N50 per share.

Zenith International Bank added 27k to close at N23.95, while Red Star Express grew by 24k to close at N5.04 per share.

On the other hand, Dangote Cement recorded the highest loss for the day, dropping by N6.55 to close at N230 per share.

7UP Bottling Company trailed with a loss of N2 to close at N86 and PZ Industries declined by N2 to close at N20.40 per share.

Unilever depreciated by N1.90 to close at N36.10, while NASCON was down by 77k to close at N14.62 per share.

NAN also reports that the volume of shares traded closed lower with an exchange of 184.25 million shares valued at N3.32 billion transacted in 3,590 deals.

This was in contrast with a turnover of 238.36 million shares worth N3.42 billion exchanged in 4,238 deals on Tuesday.

FBN Holdings maintained its leadership as the most traded, accounting for 27.06 million shares valued at N183.45 million.

Zenith International Bank followed with 24.69 million shares worth N594.08, while Fidelity Bank traded 18.05 million shares valued at N28.72 million.

Diamond Bank sold 14.92 million shares worth N16.29 million, while UBA sold 14.49 million shares valued at N138.54 million. (NAN)

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