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Business Finance Info & Updates

Consumer goods stocks gain N93bn

Investors in consumer goods sector quoted on the main board of the nation’s stock market gained about N93bn during the month of August 2020 as the country continued gradual ease of lockdown occasioned by the COVID-19 Pandemic.

The market sentiment of the sector which comprises segments such as automobiles/auto parts, beverages, food products, household durables and personal/household products among  others have started showing signs of recovery.

Checks by our correspondent revealed that the sub-sector recorded a gain of N93bn or 5.59 per cent to close at N1.76tn in market capitalisation on August 31 as against opening figure of N1.67tn at the beginning of trading on August 1.

The lockdowns had pushed some consumer product segments to the fore, especially those seen as essential such as the packaged foods and home care segments.

While the stockpiling and stocking up seen during the initial days of the lockdown have subsided, these segments continue to benefit from the general shift to in-home consumption.

Before the pandemic, staples had suffered from low growth and some global brands were battling to stay relevant in the eyes of consumers. At the same time, luxury goods and prestige beauty grew rapidly, fueled by an upswing in global travel.

However, COVID-19 has led to sharp turn of fortunes across the different segments of the consumer goods sector.

A recent survey conducted by REACH Technologies, a Nigeria-based fintech, on behalf of FBNQuest, corroborates findings from the NBS COVID-19 impact survey that consumers have fallen on harder times.

“We infer from the survey that income levels are down by an average of 30 per cent since March, while job opportunities are fast disappearing. Another sticking point is that consumption of non-essentials has been cut drastically,” the report said.

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Respondents stated that they had reduced spending on higher value category items by 22 per cent since March.

Although overall consumption has reduced since the pandemic started, the least spending cuts were made on food and health, which respondents viewed as most essential.

The report said, “It is now becoming clear that the consumer goods sector is among the hardest hit by the economic crisis brought about by the COVID-19 pandemic.

“The fragility of household wallets has been laid bare, with statistics now pointing to even weaker consumer sentiments. The knock-on effect of fading demand and weaker oil prices are also stifling earnings of consumer goods companies.

“The market has responded sharply to these challenges by marking these companies down. Year-to-date, the consumer goods index is down -28 per cent – the worst performing index, behind the broad market index’s -7 per cent.”

It added that consumer goods companies had also entered an exceptionally tough phase following the crude price collapse in March as accessing foreign exchange at higher interbank rates made obtaining raw materials more challenging.

Punch

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