The stock market got a batching for the fourth week running as spending power of consumers and the reduction in the bottles of beer consumed is beginning to have a toil on the performance of the Nigerian Stock Exchange (NSE).
The Consumer and Industrial Goods indices also shed 1.6 per cent and 1.5 per cent respectively due to weakness in International Breweries decline by 10.0 per cent, Okomu Oil (-10.0 per cent) and CAP (-11.6 per cent).
The reduction in the intake of alcohol is becoming evidence with moves to increase tariffs on alcohol in the country.
President MuhammaduBuhari last year June, approved an amendment to the excise duty rates for alcoholic beverages and tobacco with effect from today, Monday, 4th June, 2018.
The President has also granted a grace period of 90 days (three months) to all manufacturers before the commencement of the new excise duty regime.
Then Minister of Finance, Mrs. KemiAdeosun, explained that the new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products.
Following the President’s approval, the minister explained that the new excise duty rate on tobacco was now a combination of the existing ad-valorem base rate and specific rate while the ad-valorem rate was replaced with a specific rate for alcoholic beverages.
“For Alcoholic Beverages, the current ad-valorem rate will be replaced with specific rates and spread over three years to moderate the impact on prices. This will curb the discretion in the Unit Cost Analysis (UCA) for determining the ad-valorem rate and prevent revenue leakages.
Adeosun had argued that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 per cent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 per cent in South Africa and 30 per cent in Gambia.
The new specific excise duty rate for alcoholic beverages cuts across Beer and Stout, Wines and Spirits for the three years 2018 to 2020.
Under the new regime, Beer and Stout would attract N0.30k per centiliter (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020.
Generally, sector performance was mixed as three of the six indices under our coverage trended northward. The Insurance index led gainers, up 8.7 per cent as investors bought into LINKASSURE (+37.5 per cent), NEM (+33.3 per cent) and LAWUNION (+8.7%) while the Banking and Oil & Gas indices also gained 2.6 per cent and 0.7 per cent respectively on the back of gains in ACCESS (+7.8 per cent), FORTE (+6.1 per cent) and MOBIL (+4.0 per cent). Conversely, the Afrinvest-ICT index led the laggards, declining by 4.1 per cent due to losses in MTNN (-4.1 per cent) and CHAMS (-13.9 per cent).
As a result of the intrigues, benchmark index was down 0.7 per cent Week-on-Week ( W-o-W) to settle at 29,851.29 points following a bearish performance on four of the five trading days this week. As a result, investors lost a total of N78.1 billion as market capitalisation declined to N13.2 trillion while Year-to-Date (YTD) return worsened to -5.0 per cent.
Afrinvest however said, activity level strengthened as average volume and value traded gained 499.3 per cent and 35.9 per cent to settle at 189.9 million units and N4.2 billion respectively. The most traded stocks by volume were WEMABANK (5.1bn units), ZENITHBANK (450.6 million units) and GUARANTY (74.0million units) while ZENITHBANK (N9.0 billion), WEMABANK (N3.2 billion) and GUARANTY (N2.3 billion) were the major gainers by value.
