It was a historic day last Thursday when the Nigerian stock market recorded a historic break after equities trading crossed a record peak of five per cent of the trading index just mid-day.
According to the Nigerian Stock Exchange (NSE), operator of the local stock market, “a market-wide circuit breaker kicked in today, Thursday, November 12, 2020, at 12:55p.m, when the NSE All-Share Index (NSE ASI) rose beyond the set threshold of 5 per cent, triggering a 30-minute trading halt of all stocks.”
NSE said it was the first time that the circuit breaker had kicked in since its introduction in 2016.
The circuit breaker protocol was triggered by the increase of the ASI from 33,268.36 points to 34,959.39. The market reopened at exactly 1:25 p.m., with a 10-minute intraday auction session, before resuming continuous trading till the close of the day at 2:30 p.m.
It was the best day of the year and of the week for traders in stock. However, during the halt of trading, no order could be placed until trading resumed, NSE said. During the period, existing orders could be withdrawn or cancelled but could not be modified.
Trading halts did not affect the clearing, settlement, and depository operations for matched trades, as these, functioned as normal. Furthermore, all existing orders keyed in prior to the trading halt were re-activated and were matched upon resumption of trading, NSE said in an explainer.
According to a report by Bloomberg, the Nigerian stock market, which traded in Lagos on Thursday, recorded the best performing globally that day among 93 benchmarks the medium had tracked. Equally, its 32% advance in 2020 is the strongest of any major equities gauge.
At the close of the Thursday market, reports from NSE indicated that the bulls were on rampage with the market indices rising by 6.23 per cent.
The ASI rose by 6.23 per cent, closing at 35,342.46- that was higher by 2,074.10 points higher than the 33,268.36 recorded on Wednesday. The market capitalisation rose higher by N1.08 trillion to close at N18.467trn. At least N17.383trn was recorded the previous trading day.
On Friday, being the last trading day for the week, the equities market recorded its first loss after gaining for four straight days.
NSE recorded a 0.86% drop this day and it was attributed to profit-taking from the appreciated stocks. With this effect, the market capitalisation lost N159 billion (0.86%) as it closed at N18.308trn instead of the N18.467trn recorded on the historic Thursday.
The ASI also dropped slightly by 305 points, from 35,343.46 points to 35,037.46 at the close of the market.
According to a summary report by NSE, the week was a good one as a turnover of 4.509bn shares worth N58.733bn was recorded in 47,140 deals.
The investors’ traded figure on the floor of the Exchange doubled the result of the previous week when 2.067bn shares valued at N22.636bn were traded in 25,187 deals.
The historic trading and double-figure readings of last week attracted comments from sector players. Uche Uwaleke, a professor of Capital Market who spoke to the News Agency of Nigeria (NAN) said the circuit breaker triggered by the NSE on Thursday trading was to stem market speculation.
Uwaleke also said the development shows effective market regulation by NSE.
“It’s important that bullish stock prices are justified by fundamentals otherwise a bubble sets in which can have grave consequences not only to the market but also the economy in general,” he added
Equally at the 5th Market Data Workshop hosted by NSE last Friday, the importance of market data was highlighted especially in guiding investors in the Nigerian economy.
The Chief Executive Officer, NSE, Mr. Oscar Onyema said while the equities market recorded negative performance in the first quarter of the year, it bounced back since April 2020 and has so far gained +31.67% as at November 12 (Thursday).
“It demonstrates the opportunities that abound in the market for discerning investors, even in a time of crisis, and underscores the importance of quality market data for investment decision-making,” Onyema noted.
At a panel session with Felix Egbon, Group Head, Risk Management, Zenith Bank Plc; Tapa Das, CEO of NG Clearing Ltd; and Oladipupo Oyefuga, Head, Risk, Stanbic IBTC Bank, among others, the experts highlighted the importance of building investment models that can be tested with real-life situations.
They said the happenings of 2020 have proven that reliable real-time and historical data that can easily be understood is critical to building these models.
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