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SEC-Oando feud hits hard on stocks



Following the feud between the Securities and Exchange Commission (SEC) and Oando Plc, the Nigerian stock market took a hit as all trading sessions ended in the negative territory.

Investors who had witnessed a 0.61 per cent increase as at last week were hoping that the trading sessions in the first week of June would be positive, however, on hearing the news of outcome of the SEC’s probe into the operations of Oando, beat a retreat with their profits, and lost about N283 billion.

The Nigerian stock market resumed Monday’s trading on a negative footing with the All Share Index dropping 0.45 per cent to settle at 30,930.39 points on the back of losses in Seplat, ETI and Dangote Sugar. Consequently, market capitalisation declined by N61 billion to close at N13.623 trillion while Year-to-Date loss worsened to -1.6 per cent. There was, however, no trading activity on Tuesday and Wednesday because of the Eid Muburak celebrations by Muslim faithful.

Trading resumed after the holiday on a bearish note as the ASI dipped 1.30 per cent to settle at 30,527.07 points, due to losses in Dangote Cement, GT Bank and UBA. Subsequently, investors lost N179 billion in value as market capitalisation fell to N13.444 trillion while YTD loss worsened to -2.9 per cent. Friday’s session was not different as the benchmark index fell by 0.31 per cent to close at 30,432.13 points while market capitalisation decreased by N42 billion to close at N13.402 trillion.

This represents N283 billion week-on-week (w-o-w) lost in three consecutive trading sessions on the floor of the Nigerian Stock Exchange. At the close of transactions on Friday, 23 equities depreciated in value while 10 others appreciated. PZ topped the losers’ chart with 9.82 per cent to close at N7.35 per share, UPL followed with 9.55 per cent to close at N1.80, Chip Plc dropped 9.09 per cent to close at 0.20 kobo, Total lost 7.41 per cent to close at N150 while Academy declined by 6.90 per cent to close at 0.27 kobo.

On the flipside, Cutix topped the gainers’ chart with 6.67 per cent to close at N1.60 per share. NPF Microfinance Bank was next with 6.67 per cent to close at N1.44, Chams increased by 5.83 per cent to close at 0.36 kobo, Wema Bank rose by 3.33 per cent to close at 0.62 kobo while Lasaco garnered 3.23 per cent to close at 0.32 kobo. UBA drove the volume chart with the sale of 91.68 million valued at N565.89 million. Zenith Bank traded 30.37 million worth N614.36 million while GT Bank transacted 29.75 million valued at N907.77 million.

Overall, the volume and value of stock traded stood at 305.55 million units and N3.90 billion respectively in 3,754 deals. In what many have described as one of the longest forensic audits in the history of Nigeria, the Securities and Exchange Commission (SEC) last weekend after publishing the outcome of its probe into the operations of Oando Plc, prescribed some far reaching sanctions for two of its principal officers, Mr Wale Tinubu and Omamofe Boyo.

Furthermore, the commission had in the aftermath of the sacking of Tinubu and Boyo, constituted an interim management headed by Mr Mutiu Sunmonu, a former Shell Development Company boss, to oversee the affairs of Oando Plc and conduct an Extra Ordinary General Meeting on or before July 1, 2019. But Tinubu and Boyo, who rejected the sanctions sought redress at  a Lagos  High Court presided over by Justice Mojisola Olatoregun, who granted all their prayers.

The judge ordered that the order be served on SEC alone with the motion on notice, as well as other processes. She also directed the applicants to file an undertaking indemnifying the Commission in case it later turns out that the orders ought not to have been made. However, on the same day the judge gave the ruling, a detachment of the policemen laid siege to the Lagos head office of the oil and gas company to enforce SEC’s removal of Tinubu and Boyo, that was announced last weekend.

But responding to SEC’s publication of the audit findings and sanctions on Oando, some shareholders were of the opinion that SEC had done the right thing while some expressed displeasure that the regulator’s actions were made public on its website before the company received a formal letter on the evening of the same day. Some analysts who spoke to Sunday Sun said that the feud between the regulator and the oil firm contributed to the performance of the market.

Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, said: “ For me, investors in Oando will be worried and we are likely going to see dumping of their shares and I believe they will no longer wait for the outcome in the sense that the allegations are quite grievous. I think this will affect the performance of the market as I have not seen any positive development or exciting information that should drive any bullish run and so in the absence of any trigger and also with the issues of market infractions, I do not see any bull run in the market for now.”

Also speaking, the Chief Operating Officer, InvestData Limited, Ambrose Omordion, said that the Federal Government would need to intervene in the matter to safeguard investors’ confidence. Omordion said that the unfolding events between Oando and SEC could dampen investor’s confidence and tamper with Nigeria’s integrity.

He said the international investment community was watching to see the manner the Oando issue would be handled. “The way SEC and government will handle this issue will go a long way to determine the success of the nation’s drive for financial inclusion and attraction of new retail investors and foreign investors returning to the market,” Omordion said.