Friday September 11, 2020 / 10:50 PM / by NASD Plc/ Header Image Credit: NASD Plc
Covid-19 Impact Series: Financial Sector (Non-Banking Institutions)
Although the financial system has been discussed in one of our previous article series, this piece would be providing insights into the impact of the coronavirus on certain segments of the financial sector. The prequel to this was mainly aimed at the banks. However, this article would be highlighting certain aspects of the non-financial institutions that feel the ripple effects of this unexpected occurrence.
One important aspect to consider is the private equity markets. Due to the risks that sprung up as a result of uncertainty in the global economic situation, it has caused a drop in equity valuation. Thus, this triggered the International Private Equity and Venture Capital Valuation (IPEV) adjusted guidelines which catered for the economic impact of the virus outbreak. Besides, this will bring about an expected drop in the number of exits because of the reduced incentives for sellers because of the decline in private equity valuation. This period would also present a serious test for the investor's confidence. Thus, investors would not want to make the mistake that some made during the 2008 financial crisis by exiting the market due to panic as a result of the decline in returns and eventually it rebounded.
Moving on, another volatile sector that has been greatly influenced by this pandemic is the stock market. The instability of the market has resulted in a steep drop in prices. This is why the portfolio of investors are falling in value. The general drop in global oil prices, the trade war between Russia and Saudi Arabia coupled with the virus outbreak are one of the reasons for this. Consequently, the global stock market crashed earlier this year.
Even though the bond market is expected to be less volatile, it has not gone unscathed during this period. The bond prices have moved downward and followed a similar direction to the stock market. This is because the extreme global market volatility and uncertainty has rapidly led to a mismatch in buyer and seller expectations. This has influenced the price and bond valuation of securities in the United States of America - which were considered the most stable and valuable in the world.
Similar to the 2008 crisis, the mortgage market has been bleeding. The increase in unemployment as a result of the pandemic has reduced the income per head. Therefore, some households are struggling to keep up with their mortgage payments. Moreover, the insurance sector has also been impaired negatively as there has been an increase in claims because of the global uncertainty. Particularly, health and transportation desperately need these claims to stay afloat.
Finally, for investment firms and market operators, this pandemic has caused a decline in the number of investments. As said earlier, it is mainly because of the uncertainty that has been thrown into the market. In a bid to alleviate this, NASD provides a community that can help ease investor's concerns through its platforms - the Enterprise Portal (NASDeP) and the Venture Ramp. This will improve market confidence and help to facilitate liquidity for the entrepreneurs and firms that need it for business activities.
NASD OTC Securities Exchange Market closed on a positive note YTD as the market recorded an increase in performance. NASD Security Index Year to date return rose by 2.15%. Total volume traded Year-to-Date stands at 7,823,551,787 units in 1107 deals and total Value traded is N 10,747,515,077.41.
Week 37 Overview
NASD OTC Securities Exchange closed the week with a negative return on NSI. The NSI return fell by -0.23% to close the week at 712.54 points against 714.21 points against preceding Friday, September 4 2020.
In addition, Week 37 saw NASD Investors lose N1.25 Billion in value. NASD OTC Market capitalization closed at N524.64 Billion compared to N524.64 Billion in the preceding Friday, resulting from a negative movement of prices.
In the same pattern, volume traded during the week was 640,354.00 units compared to 75,289.00 units in the previous week leading to a 750.53% decrease in trade volume compared to week 37. Total volume traded for the year is 7,823,551,787 units.
In the same pattern, volume traded during the week was 640,354.00 units compared to 75,289.00 units in the previous week leading to a 750.53% decrease in trade volume compared to week 36. Total volume traded for the year is 7,823,551,787 units.
Top Traded Securities by Volume
The week closed with Central Securities Clearing System Plc ranking top among five most traded securities by volume and First trust Mortgage Bank Plc as the fifth most traded stock by volume in week 37.
Top Traded Securities by Values
The week closed with Niger Delta Exploration and Production Plc ranking top among five most traded securities by value and Food Concepts Plc stood as the fifth most traded Security by Value for the week.
Advancers for the Week
One of NASD OTC stocks closed the week with a positive movement in price. Central Securities Clearing System Plc, which currently holds a Market Capitalization of N122.04 Billion closes the week at N125 representing a 2.88 percent increase from the previous close of N121.5.
Decliners for the Week
One of NASD OTC stocks closed the week with a negative movement in price. Central Securities Clearing System Plc, which currently holds a Market Capitalization of N942.5 Billion closes the week at N14.5 representing a -6.41 percent decrease from the previous close of N13.57.