Nearly two months after President Muhammadu Buhari took over the administration of Nigeria, investors in the nation\u2019s stock market have lost over N1.032 trillion. Stakeholders have attributed the development to slow pace of governance, lack of policy direction,\u00a0\u00a0 high political risk, feud in the federal\u00a0\u00a0 legislature, no ministerial appointment, amongst others.<\/p>\n
The recent drop in the Nigerian stock market indicators also shows a seventh consecutive weekly loss, the longest streak since September 2011.
\nFinancial Vanguard analysis shows that from May 29, 2015 to end of stock market trading last Thursday, investors had lost about N1.032 trillion in the nation\u2019s stock market , as the Nigerian Stock Exchange, NSE\u2019s market capitalisation which represents the value of investors\u2019 investment in the stock market declined from N11.659 trillion to N10.627 trillion.
\nAnother stock market gauge, the All Share Index declined by 9.5 per cent or 3,262.38 points to close last week Thursday at 31,047.99 points from 34,310.37 points it closed on May 28, 2015.
\nA further review of other performance indices on the NSE shows that the NSE 30 Index\u00a0 declined by 1.4 per cent from 1,425.81 points\u00a0\u00a0 during the period under review to close last week Thursday at 1.406.49 points;\u00a0\u00a0 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\u00a0\u00a0 from 772.74 points to 759.61 points;\u00a0\u00a0 NSE Oil and Gas Index declined by\u00a0\u00a0 0.054 per cent\u00a0\u00a0 from 346.87 points to 346.68 points; Lotus Islamic Index declined by 1.3 per cent\u00a0\u00a0 from 2, 151.32 points to 2,176.29 points ; NSE Industrial Index went down by 1.5 per cent\u00a0\u00a0 from 2.208.64 points to 2,176.29 points;\u00a0\u00a0 NSE ASeM Index\u00a0\u00a0 remained unchanged as it close at 1,209.30 points.
\nMeanwhile, the NSE dropped 2.2 percent last week Monday. The index gained 0.3 percent at the close on Thursday, snapping 11 days of losses. The market, which is closed on Friday and Monday for Eid celebrations, has dropped 7.2 percent this quarter, the worst-performance globally outside of China, according to a Bloomberg ranking of 93 primary indexes.
\neconomyCentral Bank of Nigeria, CBN introduced several trading restrictions to support the currency of Africa\u2019s biggest oil producer in the face of an almost-50 percent slump in crude prices in the past year. Last month it stopped importers of 41 items ranging from private jets to toothpicks from using official foreign exchange markets. That has led to a surge of demand for dollars on the black market, reinforcing investors\u2019 belief that a devaluation of the official rate is necessary, according to Ayodele Salami, Chief Investment Officer at Duet Asset Management.
\nCommenting on the seventh consecutive weekly loss experienced in the stock market, various stakeholders who spoke to Financial Vanguard linked the performance to the state of political, economic and financial situations in the country.
\nThe Acting President of Chartered Institute of Stockbrokers, CIS, Mr. Oluwaseyi\u00a0\u00a0 Abe said \u201cCurrently, the slow governance, non appointment of ministers, lack of policy direction by the Federal Government\u00a0\u00a0 have all contributed to affect the performance of\u00a0\u00a0 the market . It is our hope that once the economy starts running the market will improve and begin to attract investors.\u201d
\nIn his own comment, Managing Director\/CEO of Highcap Securities Limited, Mr. David Adonri said: \u201cThe 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.\u201d
\nThe Managing Director\/CEO of Capital Bancorp Plc, Mr. Aigboje Higo said: \u201cThe economic situation has affected the stock market.\u00a0\u00a0 The foreign exchange market is a factor that affects the 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.\u201d
\nContinuing, he said \u201cthe Nigerian Capital Market has a lot of potentials and investors should take advantage of an array of investment opportunities and do not need to wait until the boom period.\u201d
\nAnother stakeholder, Mr. Oderinde Taiwo, National Coordinator, Proactive Shareholders Association of Nigeria, PROSAN said \u201cWhat is affecting the market is the governance of the economy. The foreign investors are complaining of no policy direction of the government as none of them would want to invest in such an economy. There are no ministers appointed, so investors are watching. Also, we should note that our market is dominated by foreign investors who are interested in the return on their investment and not in market development. Also, we have the issue of weak naira in place. The naira is dropping every day due to lack of policy direction by the Federal Government. The infighting among the ruling party is not helping matters. So the Federal Government must start quickly to address these issues otherwise there will be continuous run on our market.\u201d
\nAnother stakeholder, Mr. Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria, and PSAN said \u201cOur market relies much on foreign investors which is not the best. So, the political and economic situations have all contributed to the decline of the market. The foreign investors are interested in returns on their investment. They are not risk takers like the local retail investors. So, the Federal Government should begin to implement policies that will attract local investors. It was the unattractive investment climate that affected the market in the past years.\u201d
\nIt should be noted that following multiple rules rolled out by the Central Bank of Nigeria (CBN) in recent time, other financial experts have classified the monetary policy regime and environment as unstable, uncertain and therefore hostile to businesses. CBN had rolled out two circulars last week declaring some items ineligible for both its foreign exchange (forex) window and the alternative sources namely, the bureau de change (BDC) and export proceed windows, citing excessive pressure on foreign reserve and the need to stimulate local production of those items.
\nAfrinvest Group, a leading investment house in Nigeria, in its reaction last weekend said\u00a0\u00a0 \u201cWe observe that some of the recent policies are characterized by seeming inconsistencies, conflicts, policy reversals\u201d adding that \u201cmore clarifications that have trailed forex guidelines have considerably weakened the credibility of the CBN.\u201d
\nAccording to Afrinvest, \u201cThe financial market (equities and fixed income)\u201d, according to them, \u201cis 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.\u201d
\nVanguard<\/p>\n","protected":false},"excerpt":{"rendered":"
Nearly two months after President Muhammadu Buhari took over the administration of Nigeria, investors in the nation\u2019s stock market have lost over N1.032 trillion. Stakeholders have attributed the development to…<\/p>\n","protected":false},"author":1,"featured_media":40929,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[17],"tags":[],"class_list":["post-40928","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-exclusive"],"yoast_head":"\n