Equities Slump 3.6% as Investors Panic on Oil Rout

It was a bloodbath on the Nigerian Bourse today as sentiment for equities collapsed on account of news flow revealing a bearish outlook for crude oil and FX uncertainties. This spurred further bearish trading that culminated in a 3.6% decline in the benchmark - All Share Index (ASI) - to 25,103.05 points. This brought WTD and YTD losses of the index to 7.6% and 12.4%respectively. Market capitalization also declined N320.5bn to 8.6tn. Although the sell down pressure today was across board, the losses sustained in bellwethers -- DANGOTE CEMENT (-5.0%), NIGERIAN BREWERIES (-4.7%), ZENITH (-9.5%), NESTLE (-5.0%), GUARANTY (-5.0%) and WAPCO (-3.7%) -- mainly accounted for the huge loss in the broad index. Activity level was mixed as more units were traded (up 65.3% to 369.2m units) although value traded fell 32.8% to N1.7bn.

All Sector Indices Close Red
All sector indices closed red for the third consecutive session, a reflection of the poor sentiment on the bourse. The Industrial Goods index topped losers' with a 4.1% decline on account of the huge sell pressure in DANGOTE CEMENT (-5.0%) and WAPCO (-3.7%); while the Banking index trailed following sustained losses in Tier-1 lenders -- GUARANTY (-5.0%), ZENITH (-9.5%). Further depreciation in NIGERIAN BREWERIES (-4.7%) and NESTLE (-5.0%) pushed the Consumer Goods index down by 3.4%. The Insurance and Oil & Gas indices closed 0.5% and 0.4% weaker respectively.

Market Sentiment Collapses to 0.1x
The Market breadth (advancers' vs. decliners' ratio) bottomed at 0.1x today as only 3 stocks gained while 32 declined, indicating weak sentiment and deep selling pressure in the bourse. The 3 gainers were ASHAKACEM (+9.3%), CUSTODYINS (3.4%) and NEM (+3.1%) OKOMUOIL (-9.7%), ZENITHBANK (-9.5%), IKEJAHOTEL (-9.5%), UBA (-6.1%) and GSK (-5.0%) topped the losers' chart. As the depressed market breadth indicates, there still exists active sell pressure in the bourse and we expect further declines in the trading sessions ahead. We also do not see an immediate recovery in sentiments as all macroeconomic indicators and weak policy responses seen so far point to a structural slowdown in growth and tougher operating environment for companies. Despite our expectation of higher inflation rate driven by cost-push factors, we advise clients to overweight on fixed income to preserve capital.