Stock market loses N1tr amid falling oil prices

The decline in the prices of crude oil in the international market seems to be taking its toll on the Nigerian stock market, with the share price of most equities listed on the Exchange continuing to drop over the past six weeks.

This has also seen a lot of investors exit the market over fear of prolonged bearish trend.

Specifically, data compiled by TheCable showed that the Nigerian Stock Exchange (NSE) market capitalisation, which was N13.669 trillion as at September 1, 2014, had fallen by N1.056 trillion to N12.613 trillion as at the close of trading on Friday October 17, 2014.

Similarly, the NSE All-share Index (ASI), another indicator used to gauge market performance, suffered a decline, dropping to 38,197.73 basis points last Friday from 41,398.05 basis points on September 1, 2014.

United States crude oil closed Friday at $82.75 per barrel but was still down about 20 per cent over the last three months. That downward slide will likely continue until oil prices hit $75 a barrel, experts have predicted.

The situation in the international oil market is having an effect on oil and gas stocks listed on the NSE.

The performance of shares on the oil and gas sub-sector revealed a steady decline in their prices in the last six weeks, precisely fromSeptember 1 to October 17, 2014.

For instance, the share price of Oando plc dropped by 20 per cent from N26.75 kobo as at September 1 to N21.40 kobo per share on October 17, 2014.

Also, the share price of Conoil plc dipped by 19.4 per cent from N61.05 kobo as at September 1 to N49.23 kobo per share on Friday.

The share price of Seplat Petroleum Development Company fell by 19.4 per cent from N680 on September 1 to N548.31 kobo per share on Friday.
Other oil stocks that were affected in the same period include Eterna oil, Forte oil, Mobil and Total.

Eterna oil declined by 8.3 per cent from N4.09 kobo to N3.75 kobo per share, Forte Oil shed 6.1 per cent falling from N229.99 kobo to N215.90 kobo per share, Mobil Oil Nigeria plc’s shares dipped by 5.2 per cent from N175 to N165.80 kobo per share, while Total Nigeria plc slipped by 5 per cent from N180 to N171 per share.

Mr Chijioke Obiagwu, a financial analyst, attributed the general trend in the stock market to “foreign and domestic investment pull-out due to uncertainty in the country and especially in West Africa,” where the Ebola scare has been high.

However, he was optimistic that the trend would soon be reversed.

“Nigeria is Africa’s largest economy and so investors cannot ignore this country. What we are seeing in the market will soon be corrected,” he said.

“We have the key indices to grow the economy. Our GDP is the largest in Africa and the banking sector is healthy and listed companies are doing well.”