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Nigerian Capital Market Contributes 20% To GDP, Vulnerable To External Shocks—pr - Business - Nairaland

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Nigerian Capital Market Contributes 20% To GDP, Vulnerable To External Shocks—pr by dipoolowoo: 5:34pm On Jul 12, 2018
By Dipo Olowookere

Nigeria’s first professor of capital markets, Mr Uche Uwaleke, has warned that the nation’s equities market was too vulnerable to external shocks.

According to him, this was so because of the small size of the market.

To limit the impact of an external shock on the local bourse, efforts must be made to expand it, he said.

The highly respected financial expert lamented that it was unfortunate that foreign portfolio controls larger percent of the Nigerian market when compared with domestic investors.

“Foreign investors are significant players in the equities market, often dictating the pace of market activity. This leaves the market vulnerable to external shocks.

“At another level, the private bond market is very small compared to that for the government,” he noted.

Prof Uwaleke said in general, the Nigerian capital market presently contributes less than 20 percent to the nation’s Gross Domestic Product (GDP).

“Market liquidity, as measured by trading volume and turnover, is comparatively low. The issuer base is not diversified. More specifically, industry composition in the stock market is concentrated in a few,” he said.

Business Post reports that in 2017, the Nigerian Stock Exchange (NSE) was among the top five performing markets in the world, clinching the third place after appreciating by over 40 percent.

This year, the market’s Year-to-Date (YtD) returns, as at the close of market today, stood at -2.66 percent.


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