The Federal Government’s decision to lift the ban on importation of Cement has started taking its toll on the stocks of companies in the building sub-sector of the Nigeria Stock Exchange (NSE). There are eight companies in the building segment of the market. Of the lot, four are cement firms and the rest are into allied services.

Since the government lifted embargo on cement importation and gave provisional approval to 13 companies to import bulk cement to make up for the shortfall in supply, market reaction to the stocks, especially those of cement companies has been negative. The stocks have featured prominently among the losers in the last one week. Cement Company of Nigeria opened at N22.49 on Tuesday 15, 2008 dropped to N19.10 on Friday 18, 2008.The stock has lost about N3, representing 0.98 per cent.

Similarly, Benue Cement opened at N48.90 and closed at N45.13. Ashaka Cement, which opened at N49.00, closed atN46.57, representing a loss of N2.35 at 2.3 per cent. The stock had earlier lost N1.40 last Tuesday. It opened at N54.70 and closed at N51.97. This represents a 3 per cent decrease. Market operators said that the sudden fall in prices of shares of cement firms was not due to fundamentals. They said that the companies relatively had been performing well in terms of returns on investment, profits and turnover ratios.

A stockbroker, Ifedayo Ige, said the lifting of ban on importation of cement was responsible for the loss in prices of the stocks. Ige, an official of Anchoria Investment and Securities Limited, said that the change of policy had unsettled the local manufacturers and the investors. Equity investors, according to him, are afraid of the after effects of the policy with the belief that it will affect local production of the commodity.

He said that the development influenced many investors to sell their stocks as they believed that the local manufacturers might not realize sufficient profits and compete effectively with importers. "The importation of cement will lead to drastic reduction in prices and ultimately affect the revenue base of the local manufacturers and the subsequent loss of patronage by the stocks". Also, a broker with Ideal Securities Limited, Abubakar Ayinde Lawal said that the new policy on importation of cement resulted to panic in the market. He said that investors were afraid of what would happen to their stocks and as a result, decided to sell part of their shares in those companies.

On the fear of competition between the local manufacturers and importers, he said that the prices fall cannot be attributed mainly to competition but to markets perception.