Fewer winners in mostly bearish trading on the Exchange
• PRESCO, Unilever, Lafarge Africa, Berger Paints, Guinness top gainers’ chart year to date
• NSE gets laurels from local, international bodies
Even in the last month of 2015, the bears remain in the driving seat on the Nigerian equities market with market capitalisation in the southward trend of N1.26 trillion as at November 2015, when this report was done. The All Share Index in the same period declined 15.39 per cent from 34,375.5 to 29.169.37 basis points.
In a paper presented at the Capital Market Correspondents (CAMCAN) workshop recently, the CEO, Nigerian Stock Exchange (NSE), Oscar Onyema stated: “Across Africa, 20 of the 24 exchanges have been experiencing one form of ripping tear or the other with only the likes of JSE able to withstand the decline in their country economic indices to remain in the positive.”
On the global scale, the outlook has been a mix grill. Dow Jones did -8.63 per cent, NASADAQ Composite Index -2.45 per cent, FTSE 100 Index UK -7.68 per cent to mention but a few.
It hardly needs mentioning that the stock market is very unpredictable. Its gyrations could confound the most financially savvy professionals and perhaps optimist who may think they have seen it all or can outsmart everyone else.
Scarcely could anyone hope to predict successfully about movements on the stock market.
In Nigerian, multiplicity of factors account for the protracted bearish trend in the equities market. Top on the list is the fall in crude oil price, Nigeria’s major foreign exchange earning resource. From a $100 per barrel, oil price plummeted to as low as $45 in January. A number of reasons account for this bit. One of such is the production of shale oil in North America, which led to reduced import appetite for crude with OPEC members not willing to cut production.
The price slump meant decrease in the country’s foreign reserve and couple with devaluation of the Naira, there were additional pressures on the Nigerian economy, which negatively impacted the Nigerian equities. More foreign investors became frightened with the possibility of additional currency risk.
Anxieties around the elections in April further worsen the run as some investors were worried and began to pull out, as they were unsure if the country would remain an entity after the presidential election. To the relief of most Nigerians, the elections were peaceful and a new wave of change was ushered with the election of President Muhammadu Buhari.
Following this development, the market quickly reacted to with an 8.30 per cent rise in All Share Index from 34,380.14 to 31,744.82 basis points in what has been termed the Buahri Bounce.
However, the excitement was soon to be short lived as the market started going down over the tacit position of the new government on economic policy and direction. As if that was not bad enough, the President failed to announce a cabinet and promise to do so by September 30, five months after being sworn in as president.
Though the cumulative effect of the macroeconomic environment affected the market, the Nigerian Stock Exchange as an organization showed resilience as well as some of its listed companies.
For example among some of the companies that achieved a positive gain over nine months’ period in the market include PRESCO, gained 24.69 per cent, Unilever, 23.71 per cent, Lafarge Africa, 20.99 per cent, and Berger Paints, 15.78 per cent.
On dividend payouts, some companies have also maintained their dividend and bonus payments. Nestle – 18.50 per share, Guinness and Total N8.00 each, AP N5.20 to mention but a few.
Though analyst maintained the bearish trend may continue till Q1 2016, pointing at the lingering absence of policy direction for the economy, which is encouraging more investors to sit on the fence.
Notwithstanding that, some optimistic analysts posited that there is glimmering hope of rebound.
According to them, many stocks have hit rock bottom price and trading below book value. A rebound is expected if shrewd investors come into the market to buy low now ahead of perceived rebounds. This sentiment will be enhanced when the government also unveils its economic agenda that will favour investors. Such will attract those currently sitting on the fence into the ring.
To some, this should be the greatest wealth creation moment in the capital market alluding to what Warren Buffet would have done if playing in this market. As Warren Buffett is fond of saying, when the mood of crowds is at its darkest, that’s the time to buy; when the masses are in a trading frenzy, run for the exits.
Worth mentioning here is the fact that despite the persistent bearish trend in the Nigerian stock market, NSE has been receiving awards for its various contributions to the market.
In 2015 alone, the Exchange received a total of four awards. It was presented with the “Best Corporate Social Responsibility Award” at the 2015 African Business Awards in New York. The award recognizes NSE’s efforts in promoting sustainability and corporate social responsibility in the capital market. The award further proves NSE’s achievements in ‘adopting the highest levels of international standards’ this past year, as it is also part of its corporate policies. The NSE is the biggest Exchange in West Africa, which champions sustainability along four key impact areas – Marketplace, Community, Workplace, and the Environment.
Earlier in the year, the NSE received the “African Regulator of the year award” at the 6th African Business Leadership Awards in London.
According to the organizers of the award, African Leadership magazine, UK, “This award is being conferred on The Nigerian Stock Exchange for its effective regulatory policies and programs implemented across national, regional and international levels which has encouraged actions beyond compliance with applicable laws.
“We at African Leadership Magazine UK, recognize your efforts in enhancing stakeholders’ engagement while contributing to the growth of the National and Regional brand through practical impact on the people. Your unflinching passion for creating a reliable, efficient and an adaptable exchange hub in Africa cannot be overemphasized.”
In a separate event, the NSE received the Lagos Chamber of Commerce and Industry Award “for promoting best practice reporting and corporate disclosure.’ The objective of the annual awards, according to the Director General of LCCI, Mr. Muda Yusuf, is to recognize, celebrate and promote private and public institutions that have exhibited the core values of best business practices, growth through innovations, business sustainability and have impacted the society positively.
The NSE was also named the Financial Institution of the year by the Oil & Gas Year (TOGY) Nigeria. This award was conferred on the NSE in recognition of its first-ever dual listing with the London Stock Exchange through the $500 million Initial Public Offering (IPO) of Nigerian independent hydrocarbons company – Seplat Petroleum Plc.
The listing was the largest European IPO of an exploration and production company since the 2008 financial crisis.
Throughout the year, the NSE has affirmed its core value of transparency. In July, it released its first Sustainability Report titled: ‘Connecting Nigeria to the world through a Sustainable Capital Market.’
According to a stakeholder, the report demonstrates the Exchange’s commitment to increased disclosure.
Although the panic following JPMorgan Chase & Co’s announcement concerning Nigeria’s bond index caused transactions in the NSE to dip in September, the second quarter renditions for the period due on 17 August 2015 went on to record a 100 per cent compliance rate with the Dealing Member regulatory filings. In the midst of its challenges, this result counts as a milestone for the corporation, and bodes well with its zero tolerance policy implementation for infractions on submission of returns within required timelines.