Investors’ lose N1.03b in eight months to falling equities
The equities on the Nigerian Stock Exchange (NSE) shed cumulative value of N1.02 trillion in the last eight months, due to a largely bearish profile of trading during the period.
The investors’ wealth depreciation saga came despite strategies, strict regulatory framework and reforms introduced by the regulators to reposition the market for growth and development, as well as increase the dividend yields of shares to investors in the last eight months.
Specifically, market capitalisation of quoted equities, which opened the year at N11. 237 trillion as at January 5, 2015, stood at N10.208 trillion as at Monday, down by 3.5 per cent in eight months, while the All-share index went down by 4258.45 points or 14.3 per cent from 33,943.29 to 29,684.84.
The long reign of bears has become a cause for concern to both retail and foreign investors. For retail investors the continuous depreciation in stock prices has become a justification for their apathy to investing in the stock market.
The foreign investors, which constitute over 50 per cent of participants in the Nigerian stock market, are holding on to their investments, while a few of them with high risk appetite were simply engaged in speculative trading.
Reacting to the performance, the former President, Chartered Institute of Stockbrokers, Ariyo Olusekun attributed the lull to the uncertainties that shrouded the market currently, due to lack of necessary policy statements.
According to him, few days after the inauguration, the market witnessed some level of stability, even as many stocks appreciated in price within the period. “Uncertainties that surround the economy presently is affected recovery of the market.
Since the election, there has been optimism and it is that optimism that has stabilised the market but the market was supposed to have improved beyond the current level but because investors were waiting to know the policy direction of government in terms of the economy. “This is affecting the movement of the market.
You know investors; whether local or foreign, will not want to stake its fund where he is not sure of the economic direction of the country.
So, it is important that the government takes off quickly.” The President, Renaissance Shareholders Association of Nigeria, Timothy Olufemi said the situation was due to low government activities during the period as there was no economic direction.
Investors could not predict government focus. He, however urged investors to take position and buy more stocks so as to reap the benefits of capital appreciation when the economy stabilises. “My advice to investors is to retain their confidence in the market.
It is good time to buy before government stabilises . Things will take in 2016 and beyond. So the smart investors should buy now.”
The Managing Director, NASD OTC Plc, Bola Ajomale explained that uncertainties in the economy are pulling share prices down in the stock market. “It has affected everything in the economy, it is affecting the ports’ operations, the general commerce, importation and exportation. So, it is natural that it will affect the capital market as well.”