Nigerian Stock Exchange loses N2.49 trn value in 7 months

The value of the listed companies at the Nigerian Stock Exchange lost a combine value falling from N15.895 trillion in January to N13.409 trillion in July.  The market capitalisation which closed at N15.895 trillion in January declined to N13.409 trillion in July. A detailed look at the market data showed that  the All-Share Index lost 7,325.87 points or 16.52 per cent during the period closing at 37,017.78 in July compared with 44,343.65 in January. Prof. Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University Keffi, who spoke to NAN on the issue said that the performance of the market was dismal and eroded the growth recorded in January. Uwaleke said the market had remained bearish despite the oil price recovery, stable exchange rate, retreating inflation and even improved company fundamentals. He, however, attributed the development to heightening political tension, insecurity from herdsmen and economic uncertainties from the delay in budget implementation.

As a result Investors who bought shares on the Nigerian Stock Exchange (NSE) lost N2.49 trillion or 15.64 per cent between January and July, Stock Market analysts and advisors said the political uncertainty had taken its toll on the market. They argued that  the spike in interest rates in the United States of America and to some extent the US-China trade war combined to swing the attention of foreign investors to US markets. Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University Ago-Iwoye, Ogun, said the bearish trend was caused by movements of interest rates in the United States which resulted in withdrawal of money from the market by foreign investors. “The seeming sustainability of the downward trend is caused by fear of local investors that they might be losing large amounts of money if they don’t sell off their securities now,” Tella said.

Mazi Okechukwu Unegbu, former President, Institute of Bankers of Nigeria (CIBN), said security issues and the social environment were responsible for the negative sentiments in the capital market. Unegbu said foreign investors had pulled out their funds from the nation’s market, especially portfolio investors. He said the real investment that impact positively on the economy was foreign direct investment in the productive sector not ‘hot money investment’ in the stock market. Unegbu said government must encourage local investors to invest in the market by creating an enabling environment.

He added that politicians should stop their daily political altercations in the media, which he said was fuelling fears among investors. Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said the performance of the capital market had remained negative from February to date. Kurfi said the initial gains of January of about 17 per cent had been completed eroded by July. He said the market for about seven weeks now had experienced a loss of one per cent per a week or even more. Kurfi attributed the trend to the exit of foreign investors and the institutional investors, and that the market witnessed a lot of sell pressure. He also said the Pension Funds Administration failed to invest due to political risks.

“We hope to see revised trends probably after primary elections when the foreign investors are likely to review the prospective candidates and take decision,” Kurfi said. However, the volume of shares traded between January and July rose by 56.16 per cent with an exchange of 82.58 billion shares valued at N871.71 billion in 742,014 deals. This was in contrast with a turnover of 52.88 billion shares worth N565.83 billion transacted in 539,315 in the comparative period of 2017.