The
Nigerian Capital Market has continued to witness consistent and
prolonged downturn for the past three months, leading to the two major
indicators, market capitalisation of listed equities and All-Share
Index, plunging significantly.
For instance, investors lost a whopping sum of N1.07 trillion in July as a result of massive sell-offs that forced the market capitalisation which represents the value of investors’ investment dropped significantly from N11.421 trillion in June to N10.344 trillion in July.
Correspondingly, the Nigerian Stock Exchange (NSE) All-Share Index, which is an average of share prices of all companies listed on the Exchange, plummeted 3,276.56 points to 30,180.27 points from 33,456.83 basis points it recorded in June.
According to some market analysts who spoke on separate interviews with the Nigerian Tribune, lack of investor confidence, risk aversion approach taken by foreign investors coupled with the uncertainties surrounding the policy direction of the new administration impacted the massive sell-offs and decline in the month under review.
Further analysis of market activities in the last three months, that is, since the takeover of President Muhammadu Buhari, showed that the stock market has been very volatile as it has recorded about N895 billion.
Consequently, capital market stakeholders called on the Federal Government to roll out appropriate economic plan or policies that will drive the capital market. They opined that the status of a country’s capital market reflects the economy.
A deep look into the sectoral performance of the stocks in the month under review showed that all the sectoral indices dropped within the period as the NSE 30 index dropped by 165.19 points from 1,526.04 in June points to 1,360.85 points in July.
In the same vein, the NSE Banking Index declined by 52.58 points to close at 315.71 points in July compared with 368.29 points.
The NSE Insurance declined by 9.14 points to 134.55 points from 143.69 points, NSE Consumer Goods Index plummeted by 108.53 points from 842.70 points to 734.17 points, NSE Oil/Gas Index dropped 29.24 points to 339.30 from 368.54 points.
The NSE Lotus Islamic Index, Industrial Index and Asem Index all recorded a drop of 118.02, 42.23 and 3.39 points from 2,229.11, 2271.73 and 1,213.52 points to close at 2,111.09, 2,223.50 and 1,210.13 respectively.
Also at the end of trading in July, investors staked a total sum N85.412 billion on 6.192 million shares in 73,942 deals contrary to N101.717 billion on 6.113 million shares in 83,675 deals recorded in June.
Reacting to the factors that contributed to the huge plunge in the month under review, the Managing Director, High Cap Securities Limited, Mr David Adonri, attributed the drop to the uncertainties relating to the economy in general amidst the declining price of crude oil.
According to him, “After President Buhari took office, the high expectation of people was that, he will immediately constitute the government and start rolling out new economic policies to meet current challenges but failures on the part of the new administration to roll out appropriate economy plan gave the impression that, a firm direction was being set and so, that impacted negatively on financial economy.”
He, however, called on the government to constitute the cabinet and roll out appropriate fiscal policies to support the tight monetary policies of the Central Bank of Nigeria (CBN) so that, both domestic and foreign investors’ confidence will start growing again.
“The kind of fiscal policies I expect are those that will reduce pressure on the naira, reduce interest rate in the economy, maintain inflation at single digit and then, grow the domestic economy to be internally self-regenerating”, Adonri stated.
In their recent report, analysts at Ecobank Capital also noted that the uncertainty over policy direction from the new administration has continued to drag down the performance of the nation’s capital market.
The analysts, in their report on the Nigerian equities market, said the market performance recovered some of the losses posted during the first quarter of the year in the second quarter.
They said the NSE All-Share Index advanced by 6.20 per cent during the second quarter to peg the year-to-date return at 2.70 per cent.
The analysts, however, said that as the euphoria surrounding the peaceful conduct of the 2015 general elections began to be replaced by the reality of over 40 per cent drop in government revenue and unclear policy direction, the NSE ASI shed 1.72 per cent in June.
For instance, investors lost a whopping sum of N1.07 trillion in July as a result of massive sell-offs that forced the market capitalisation which represents the value of investors’ investment dropped significantly from N11.421 trillion in June to N10.344 trillion in July.
Correspondingly, the Nigerian Stock Exchange (NSE) All-Share Index, which is an average of share prices of all companies listed on the Exchange, plummeted 3,276.56 points to 30,180.27 points from 33,456.83 basis points it recorded in June.
According to some market analysts who spoke on separate interviews with the Nigerian Tribune, lack of investor confidence, risk aversion approach taken by foreign investors coupled with the uncertainties surrounding the policy direction of the new administration impacted the massive sell-offs and decline in the month under review.
Further analysis of market activities in the last three months, that is, since the takeover of President Muhammadu Buhari, showed that the stock market has been very volatile as it has recorded about N895 billion.
Consequently, capital market stakeholders called on the Federal Government to roll out appropriate economic plan or policies that will drive the capital market. They opined that the status of a country’s capital market reflects the economy.
A deep look into the sectoral performance of the stocks in the month under review showed that all the sectoral indices dropped within the period as the NSE 30 index dropped by 165.19 points from 1,526.04 in June points to 1,360.85 points in July.
In the same vein, the NSE Banking Index declined by 52.58 points to close at 315.71 points in July compared with 368.29 points.
The NSE Insurance declined by 9.14 points to 134.55 points from 143.69 points, NSE Consumer Goods Index plummeted by 108.53 points from 842.70 points to 734.17 points, NSE Oil/Gas Index dropped 29.24 points to 339.30 from 368.54 points.
The NSE Lotus Islamic Index, Industrial Index and Asem Index all recorded a drop of 118.02, 42.23 and 3.39 points from 2,229.11, 2271.73 and 1,213.52 points to close at 2,111.09, 2,223.50 and 1,210.13 respectively.
Also at the end of trading in July, investors staked a total sum N85.412 billion on 6.192 million shares in 73,942 deals contrary to N101.717 billion on 6.113 million shares in 83,675 deals recorded in June.
Reacting to the factors that contributed to the huge plunge in the month under review, the Managing Director, High Cap Securities Limited, Mr David Adonri, attributed the drop to the uncertainties relating to the economy in general amidst the declining price of crude oil.
According to him, “After President Buhari took office, the high expectation of people was that, he will immediately constitute the government and start rolling out new economic policies to meet current challenges but failures on the part of the new administration to roll out appropriate economy plan gave the impression that, a firm direction was being set and so, that impacted negatively on financial economy.”
He, however, called on the government to constitute the cabinet and roll out appropriate fiscal policies to support the tight monetary policies of the Central Bank of Nigeria (CBN) so that, both domestic and foreign investors’ confidence will start growing again.
“The kind of fiscal policies I expect are those that will reduce pressure on the naira, reduce interest rate in the economy, maintain inflation at single digit and then, grow the domestic economy to be internally self-regenerating”, Adonri stated.
In their recent report, analysts at Ecobank Capital also noted that the uncertainty over policy direction from the new administration has continued to drag down the performance of the nation’s capital market.
The analysts, in their report on the Nigerian equities market, said the market performance recovered some of the losses posted during the first quarter of the year in the second quarter.
They said the NSE All-Share Index advanced by 6.20 per cent during the second quarter to peg the year-to-date return at 2.70 per cent.
The analysts, however, said that as the euphoria surrounding the peaceful conduct of the 2015 general elections began to be replaced by the reality of over 40 per cent drop in government revenue and unclear policy direction, the NSE ASI shed 1.72 per cent in June.
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