Coronavirus Spread Affects Nigeria Stock Exchange (NSE) Market

Last week, the Nigerian stock exchange (NSE) market closed negative as All Shares Index (ASI) lost 4.28% to close at 26,216.46 points, while the market capitalisation, which also suffered a 4.28% loss, closed at N 13.658 trillion. This is the biggest weekly loss in the NSE since April 2019, and has occurred due to the substantial sell-offs and exit of investors following the detection of the deadly virus, Coronavirus, in the country.

In addition to those, regulatory risks in the banking sector and a slump in oil price, also contributed to the losses recorded. And as further proof of the loss suffered by the NSE, a turnover of 1.547 billion shares worth N 24.263 billion was recorded in 21,646 deals by investors on the floor of the NSE. That was a much lower turnover than the 1.499 billion shares worth N17.907 billion that was recorded in 18,515 deals during the preceding week.

The first case of the virus in Sub-Saharan Africa (SSA) was recorded in Lagos, on Thursday, February 27, when an Italian national working in Nigeria tested positive to Coronavirus. He had returned to Lagos less than 48 hours earlier, from the northern Italy city of Milan—an area that has now been identified as a hotbed of the virus in Europe. Triggering a flurry of hygienic-product panic-buying, the presence of the deadly virus in the city of 20 million people, has resulted in scarcity and price-hike of precautionary materials like, hand-sanitisers and face masks.

COVID-19, which has infected over 86,000 people and killed about 2,900 of them around the world is a novel virus that originated in China’s Wuhan Province. Asides from its mortality figures, the virus has adversely affected China’s economy, with a projected sharp contraction in the hospitality and transportation industries.

Also, if the current shut-down of inter-city transportation and production is sustained, reports from investment banks project an economic impact of as much as -1% GDP growth. However, despite these projected short-term effects, the impact on China’s long-term economic growth is expected to be negligible.

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Due to the widespread panic caused by the virus, massive selloffs have also been triggered in advanced and emerging markets, worldwide. A situation that has led to the wiping off of $5 trillion in stocks from around the world—the worst crash since the global financial crisis of 2008.

In addition to the hard hits at the NSE, experts have projected that the economies of SSA risk losing up to $4 billion worth of exports with China. Still, analysts at Investment One advise investors to take interest in trusted names with mid to long-term investment prospects.