Investors in the nation’s stock market have lost over N1.032 trillion between May 28 and July 16, 2015. The market capitalization of the Nigerian Stock Exchange (NSE) fell from N11, 659 trillion to N10, 627 trillion within this period. The drop came at the heel of a seven consecutive weekly loss, which was the longest since September 2011.
Another stock market indicator, the All Share Index (ASI) declined by 9.5 per cent or 3,262.38 points within the period under review. It declined from 34,310.37 points on May 28, 2015, to 31,047 points as at July 16, 2015.
A further review of other performance indices on the NSE shows that the NSE 30 Index declined by 1.4 per cent from 1,425.81 points during the period under review to close last week Thursday at 1.406.49 points; NSE Banking index dropped by 1.1 per cent from 342.42 points to 338.72 points; NSE Insurance Index declined by 0.63 per from 143.60 points to 143.51 points; Consumer Goods Index declined by 1.7 per cent from 772.74 points to 759.61 points; NSE Oil and Gas Index declined by 0.054 per cent from 346.87 points to 346.68 points; Lotus Islamic Index declined by 1.3 per cent from 2, 151.32 points to 2,176.29 points ; NSE Industrial Index went down by 1.5 per cent from 2.208.64 points to 2,176.29 points; NSE ASeM Index remained unchanged as it close at 1,209.30 points.
The poor performance of the stock market has been attributed to the state of political, economic and financial situations in the country. Oluwaseyi Abe, acting president of Chartered Institute of Stockbrokers, CIS, blamed the declined on slow governance, non-appointment of ministers, lack of policy direction by the Federal Government. He said that all these have affected the performance of the market. “It is our hope that once the economy starts running the market will improve and begin to attract investors.”
For David Adonri, managing director/CEO of Highcap Securities Limited, “the recent decline of the Nigerian stock market is due to several factors. First is the increase of political risks due to infighting within the ruling party at Federal level. Next is the declining price of crude oil. Others are Chinese stock market crisis, resurgence of Boka Haram, protracted energy crisis and macroeconomic liquidity squeeze. When the new government settles down, some of these issues should be addressed.”
Similarly, Aigboje Higo, managing director/CEO of Capital Bancorp Plc, attributed the loss to the country’s unstable foreign exchange market. “The weak naira is affecting investors to invest in the market coupled with rising inflation. Also, the non appointment of ministers is also another factor that has affected the market. We also have the insurgent situation in the country. Investors are weary of the insecurity in the country and are waiting for the government to assure them of drastic measures aimed to addressing the situation. But it is my hope that all these will soon be addressed given the fact that President Muhammadu Buhuri has started on a clean note by appointing credible people to handle the security sector of the economy.”
Continuing, he said “the Nigerian Capital Market has a lot of potential and investors should take advantage of an array of investment opportunities and do not need to wait until the boom period.”
Afrinvest Group, a leading investment house in Nigeria, observed that some of the recent policies of the Central Bank of Nigeria were characterized by seeming inconsistencies, conflicts and policy reversals. “The financial market (equities and fixed income)” is in dare need of a clear cut policy direction and stability. A lot of foreign investors appear to have taken to their heels leaving only the bandwagon local investors, who also have no clue of the impact of future monetary policy on their investment position in the scene,” said Afrinvest.
By Dike Onwuamaeze