Investors dumping Lasaco Assurance shares as reconstruction fails to boost investors confidence

Investors dumping Lasaco Assurance shares as reconstruction fails to boost investors confidence

- Investors confidence in Lasaco Assurance is low in the Nigerian stock market

- Lasaco's shareholders are selling the firm's shares for cheap in the Nigerian stock market

- Lasaco's share reconstruction is failing to save the company's stock from declining

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All is not well with Lasaco Assurance since it underwent share reconstruction. The insurance firm had reconstructed its shares with the hope of being more valuable in the eyes of investors, but that's not happening.

The exact opposite is what's happening to Lasaco's shares at the Nigerian stock market as investors are dumping the company's shares, even selling off for cheap at the exchange floor.

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Lasaco had undergone share reconstruction on January 29, 2021, following decline in its share price which was heading towards N0.20kobo per share, a drop zone which forces the Nigerian Stock Exchange (NSE) to delist companies.

At the time Lasaco paused trading on its shares, its stock price was at N0.42kobo per share, according to NSE data. The reconstruction of its shares took about three weeks before trading resumed on the company's shares on February 22, 2020, at N1.68kobo per share.

Share reconstruction is the reduction of share volume which causes a hike in a company's share price. Companies consolidate their shares to force their share price to increase. This is usually done for falling stock price, in a bid to increase its value in the eyes of stock market investors.

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Falling stock price isn't appealing to investors, as it signals the company is weak and puts a red flag, warning off investors against investing in the company's shares. So with Lasaco's share reconstruction over in the third week of February, the expectation was investors' interest will be renewed.

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Investors Dumping Lasaco Assurance Shares As Reconstruction Fails To Boost Investors Confidence
Investors Dumping Lasaco Assurance Shares As Reconstruction Fails To Boost Investors Confidence. Photo Credit: Getty Images
Source: Getty Images

However, since trading returned on Lasaco's share price, the insurance company's stock price has been on a decline. The share price closed the market at N1.22kobo on Wednesday, March 10, 2020, against the N1.68kobo it resumed trading with after the share reconstruction.

That means Lasaco's share price has lost N0.46kobo since their share reconstruction. Although the first week of March has been a better month for the company, with the stock price rising from N1.12kobo per share on March 1, to N1.30kobo on March 8.

But on Tuesday, March 9, Lasaco's share price fell further to N1.25kobo, and lost 2.4% in share price on Wednesday, to close the market with N1.22kobo per share.

Note that the falling share price means investors willing to buy Lasaco's shares are offering lesser amount than the market value, while shareholders of Lasaco are willing to sell their Lasaco shares lesser than the market value just to rid themselves of Lasaco's shares.

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The falling share price reflects investors' confidence is low towards Lasaco, and the share reconstruction exercise has not convinced investors that the insurance firm is investment-worthy.

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Meanwhile, earlier reported that another asset getting investors' attention is Bitcoin, as the cryptocurrency surpassed the $55,000 mark earlier today.

Bitcoin didn't only rise past the $55,000 mark, it also overtook the price of Gold for kilogram size. This is the third time in four years Bitcoin will become the most valuable asset.

Fakoyejo Olalekan is a Business and Financial Journalist with over three years of experience in covering finance and business activities within Nigeria and offshore. Prior to joining, he worked at Nairametrics where he wrote financial and investment analysis articles. Olalekan is a resourceful and result-driven journalist with a track record for conducting extensive research and interviews to produce articles that provide different perspectives to market activities.

Source: Legit

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