Equities Bleed As Foreign Investors Repatriate Earnings Through Airtel, Seplat
Foreign Portfolio Investors (FPI) whose investment proceeds are trapped due to foreign exchange scarcity may have ended up repatriating their dollar earnings by buying stocks with dual listings on London Stock Exchange (LSE) and the Nigerian Exchange (NGX).
Buying stocks that are listed both on LSE and NGX implies that they could buy in Nigerian Exchange and offload in LSE and vice versa to realize their capital.
Findings by InsideBusinessNG show that these foreign portfolio investors have targeted the shares of Airtel Africa and Seplat Energy Plc to repatriate the earnings trapped in Nigeria’s forex debacle.
“A lot of foreign investors have been trying to leave our emerging market back to their haven. Capital preservation is at the back of their minds. For them, it is better to get back their capital than lose all to inflation and other economic uncertainties”, an NGX dealing member who did not want his name mentioned confided in InsideBusinessNG.
“Since they can’t get the dollars to repatriate their capital they started buying Airtel and Seplat. That pushed up the performance of Airtel towards the last quarter of last year. Seplat price also recovered to some extent and has invariably gained during the first quarter of this year,” he started.
In NGX, the unit price of Airtel stood at N1,635.00 at the beginning of the year while that of Seplat was N1,100.00 per share.
By Tuesday, April 11, the price of Airtel had fallen to N1,198 while Seplat improved to N1,150 above the 52-week low of N952.00 set on Dec 07, 2022, due to wide swings triggered by the activities of the fleeing foreign investors.
NGX data obtained by InsideBusinessNG showed that over the last four weeks, Seplat lost -4.17 percent just as Airtel lost much higher, triggering a sharp decline in the overall performance of the equities market.
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The losses were further exacerbated as local institutional investors migrate to the fixed income market in a hunt for more attractive yield after the CBN hiked interest rate by 50 basis points to 18 percent after its 290th meeting of the Monetary Policy Committee (MPC) on March 21.
Consequently, the equities market recorded its worst decline on Tuesday, April 11, after a maximum -10 percent price fall in the shares of Airtel Africa triggered a huge loss of N569.12 billion in the market capitalisation to close at ₦28.30 trillion.
In the previous week, heavyweight Airtel had suffered a cumulative -10 percent fall in its share price as jittery investors continued to offload the stock. The unit price of the stock declined by N133.10 to close at N1,198 per share, down from N1,331.10. A total of 291,190 units were exchanged in 59 deals valued at N348,845,620.
The -10 percent decline in the price of Airtel was the major drag on the performance of the benchmark All Share Index (ASI) which tumbled by 1.96 percent to close at 51,952.99 points. It was the market’s sixth consecutive decline, dragging the month-to-date (MTD) and year-to-date (YTD) return to -4.2 percent and + 1.37 percent respectively.
Analysis of market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up by 148.31 percent.
A total of 1.72 billion shares valued at ₦4.79 billion were exchanged in 4,286 deals during which TRANSCORP (+2.19%) led the volume and value charts with 1.55 billion units traded in deals worth ₦2.10 billion.
Sectoral performance was broadly negative, as the Insurance (-1.8%), Industrial Goods (-0.6%), Banking (-0.3%), and Consumer Goods (-0.2%) indices declined, while the Oil & Gas index closed flat.
A total of twenty-one stocks were traded at losses led by Airtel Africa while NAHCO (+3.06%), TRANSCORP (+2.19%) and Caverton (+8.2%) were the few gainers.
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