Investors in the nation’s capital market have lost N3.99 trillion in two years as share prices of listed companies continue to tumble over macroeconomic challenges.
After a growth of 35 per cent in 2012, the market appreciated by 47 per cent in 2013, but took a reverse in 2014 with a decline of 20.67 per cent as the Nigerian equities ranked among the worst-performing stocks globally in 2014.
Reviews of market performance in 2014 and 2015 showed that the All-Share Index declined by 34.98 per cent from 41,329.19 points on December 31, 2013 to 26,871.24 points as at December 23, 2015. Specifically, the market capitalisation of equities went down by N3.99 trillion from N13.226 trillion to N9.238 trillion as at December 23, 2015.
The capital market’s poor performance during these periods can be attributed to the falling of crude oil price in the international market, election, increased appetite by global fund managers investing into frontier markets, devaluation of naira, among others.
The chief executive, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, recently said despite the low level of investor confidence, occasioned by market volatility and downturn in the All-Share index in the capital market, there still exists enormous investment opportunities for Nigerians to take advantage of.
He argued that the capital market is currently a reflection the state of the economy.
He said, “It would be surprising if the market is going up when the economy is having shocks. It’s important for investors to also understand that there’s been significant sell-off between last year and this year and it could present opportunity and again, it’s important to do the analysis and understand where those opportunities are and not only in the equities but across the various asset classes.”
An analyst with Calyxt Securities and Funds Limited, Mr Tunde Oyediran said, the market performance for this year has been very poor, saying “We saw strong stocks coming to a 10- year low. The prolonged bearish period since May cut short investors perception. Thus reduced their expectation, opportunity and achievement.
He attributed the causes to very low oil prices, depletion in foreign reserves, unstable or unpredictable exchange rates, security issues, quoted companies low earnings, expectation of U.S hike in interest rate and its actual increase among others. These and many other factors led to this abysmal market performance.
