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Down, Down Goes Capital Market by Emmysteve(m): 2:54pm On May 23, 2016 |
“TOTAL transactions at the nation’s bourse
decreased by 17.87 per cent from N117.27
billion recorded in February to N96.31 in
March (2016). In comparison to the same
period in 2015, total transactions decreased
by 47.66 per cent from the N184.02 re
corded in March 2015.”
This report by the Nigerian Stock Exchange
(NSE) is the smmary of the performance of
the capital market during the first year of
President Muhammadu Buhari
administration.
According to the CEO of the Exchange, Mr
Oscar Onyema, the flagship index, the All
Share Index (NSE ASI), declined by 17.4 per
cent in 2015 and closed the year at 28,642
points. “This was due to a combination of
factors including political risk, currency
volatility, and uncertainty in global crude oil
prices”, he added.
Looking at the sectoral indices,all the
market indices performed poorly, particular
ly when compared with their 2014
performance, except NSE Industrial Index
which recorded a marginal increase of 1.3
per cent.
The Banking Index was the worst hit as it
plunged by 23.6 per cent, followed closely
by the NSE 30 Index and NSE Main Board
Index, which went down by 17.6 per cent
apiece.
The market for new equity listings was flat
too, with only four new equity listings, one
on the Main Board, and three ETFs. In
contrast, five companies were delisted in
2015, bringing the number of listed
companies and number of listed equities to
184 and 190, respectively.
The total volume of equities traded declined
through 2015 by 28.8 per cent to N952.8
billion ($4.8 billion), and a foreign and
local participation rate of 54.24 per cent
and 45.76 per cent, respectively, in total
value traded. Average daily turnover was
also down by 28.5 per cent.
The report on Domestic & Foreign Portfolio
Participation in Equity Trading, just released
by the Exchange, equally reflects the down
grade of the nation’s sovereign ratings by
international rating agency as ‘monthly
foreign outflows outpaced inflows ,
although the outflows decreased by 40.20
per cent from N31.84 billion in February to
N19.04 billion, while foreign inflows
increased by 40.77 per cent from N10.94
billion in February to N15.40 billion in
March.
Recall, that Standard & Poor’s (S&P) during
the year revised Nigeria sovereign credit
outlook down to negative from stable, B+.
S&P noted that the decline in oil prices has
hurt Nigeria’s economy, adding that “Ni
geria’s monetary policy has also weakened
the country’s credit profile”.
Also JPMorgan Chase & Co. as well as
Barclays Plc dropped Nigeria’s bonds from
their local-currency emerging market
indices. Specialist African funds including
Alquity Investment Management and Duet
Asset Management also lowered their
exposure to the capital market as a result
of unclear policy direction.
It took several pleas before Index provider,
Morgan Stanley Capital International (MSCI),
agreed to keep Nigeria in its benchmark
frontier-market index after threatening to
exclude the country because of the
government’s capital controls.
‘MSCI won’t implement changes for
Nigerian securities in its benchmarks, in
cluding the MSCI Frontier Markets 100
Index, in its semi-annual review next
month,’ the New York-based index provider
said in a statement. It, however, added that
the country, would be placed under a
‘special treatment, and some individual
stocks that no longer meet MSCI’s criteria
may be deleted from the indexes.’ The
MSCI is a market-capitalisation-weighted
index designed to provide a broad measure
of stock performance throughout the world,
with the exception of US-based companies.
MSCI threatened last month to remove
Nigeria from its benchmarks because
inadequate liquidity in the foreign-exchange
market is making it difficult for foreign
investors to buy and sell securities. But
Mounir Gwarzo, the Director General of the
Securities and Exchange Commission
(SEC), said both the Commission and the
Nigerian Stock Exchange(NSE) engaged the
index provider on how to clarify whatever
issues it had against the Nigerian capital
market.
The SEC boss lamented that the
downgrading of Nigeria’s sovereign credit
rating by Standard & Poor’s have negative
impact on investors’ confidence in the
country.
His words: “Both we and NSE are talking to
them (MSCI). NSE has been talking to them
for quite some days. We have also tried to
speak with them .We have set up a small
group of people who also engage them, tell
ing them the implications, not only to NSE;
not only to the capital market, but to SEC.
“We also need to tell them that if they do
that (exclude Nigeria), the implication will
have multiplying effects. Apart from the
economy, it will also affect the status of
SEC as board member of IOSCO (Interna
tional Organisation of Securities
Commissions), as the Chairman of AMERC
(Africa Middle East Regional Committee)
and as a member of executive management
of IOSCO because of the repercussions. So
we are not taking it lightly. We also think,
with the engagements from the regulators,
we will be able to clarify whatever issues
they might have.
“Certainly the Standard & Poor’s (S&P)
downgrade can pose some negative implica
tions in terms of investors’ confidence. The
state of the market is not only unique to
Nigeria, it is unique to everywhere. Yes, it
might reduce confidence of investors. But
investors almost everywhere in the world
know what is happening”.
Commenting on the impacts of Buhari’s
administration on the market in the last one
year, Pabina Yinkere, an analyst with Vetiva
Capital Management Ltd., said: “The
government has not come up with a
definitive policy for the economy. The
continued lack of clarity is affecting the
stock market, she said.
“While Buhari, has prioritized stamping out
corruption, investors have been irked by his
support for the central bank’s currency-trad
ing restrictions that are choking businesses
of the dollars they need to pay foreign sup
pliers. More than two stocks declined for
every one that rose. The overall index has
plunged more than 21 per cent in the last
one year, the most in sub-Saharan Africa
after the Zimbabwe Industrial Index”. www.sunnewsonline.com/down-down-goes-capital-market/ |
Re: Down, Down Goes Capital Market by Emmysteve(m): 2:57pm On May 23, 2016 |
Apology to all the zombies. I am sorry for bringing all these disastrous records of your dullard here since assuming office. Buhari is a disaster. |
Re: Down, Down Goes Capital Market by nickxtra(m): 2:58pm On May 23, 2016 |
Nigeria, my Nigeria! Nigeria of the Eagle! Why hath thy wings falling? |
Re: Down, Down Goes Capital Market by Emmysteve(m): 3:00pm On May 23, 2016 |
It will take over 40yrs to correct the damage Buhari will do to the Nigerian economy after his first term as Prezd. Mark my word!- @Uchez2 |
Re: Down, Down Goes Capital Market by aloeman15(m): 4:58pm On May 23, 2016 |
True, things are dire. But it will take much less than that- IN SPITE of buhari. And all our past rulers too. There's a simple way out, if we're ready. But I don't think we are. Not yet. Emmysteve: |
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