How Investors In Nigeria Lost N604 Billion In 2016 (Read)

A report by New Telegraph indicates that equities trading on the floor of the Nigerian Stock Exchange (NSE) finished the year 2016 with a loss of N604 billion.

This is despite the fact that the last three days of the year witnessed bullish rally on the local bourse with a gain of N133 billion.

Most stakeholders attributed the problem to:

1. The economic recession

2. Tight macro-economic policies

3. Falling crude oil prices and

4. Exit of foreign investors.

According to the report, the activities on the NSE, which opened the trading year high at N9.850 trillion in market capitalisation and 28.642.25 in index at the beginning of trading on January 4, 2016, closed the year on December 30, 2016 at N9.246 trillion and 26,874.62 index points, hence has earned a year to date loss of about N604 billion or 6.17 per cent year to date.Save for the upswing witnessed during the second quarter of the year, the first quarter, third and fourth quarters ended on an unfavourable note.

Investors were wary of the outlook for Nigeria, Africa’s largest economy and the world’s number four oil producer.While assessing the current state of the market, some operators blamed the trend on the state of political, economic and financial situations in the country.

The chief finance & strategy officer of Wema Bank Plc., Mr. Tunde Mabawonku noted that the apathy being shown by both foreign and local investors in the capital market was not unrelated to the systemic challenge facing the economy.He stated that the lack of economic policy direction has fuelled uncertainty in the market, which, he added has made it difficult to attract and retain investors despite the opportunities that abound.

His words, “The biggest factors affecting investors remain lack of clarity with regards to policy direction, lower oil revenue and the unresolved foreign exchange challenges affecting the nation.

“Investors do not thrive with uncertainty and the recessionary environment is exacerbating that sentiment. Clarity of policy and government action will help resolve the situation.”

According to the President of Chartered Institute of Stockbrokers (CIS), Mr. Oluwaseyi Abe, the major factors responsible for the challenges are adverse macro-economic scenario, low level of capital literacy and retreat of foreign portfolio investors due to the hitherto adverse fixed foreign exchange change regime.

On his part, the Chief Executive Officer, Espera Global Corporation, Glenn Prince- Abbi, said that the market downturn was due to the low crude oil price, which gave the naira a battering among international currencies in 2016.In the first quarter of 2016, the All-Share Index crashed to 28,902.25 basis points from 34,310.37 basis points as the equity category lost over N1.053tn in the first quarter of 2016.According to a report released by the National Bureau of Statistics (NBS), the drop in the first quarter trade represented a decline of about 22.6% and attributed the decline in the first quarter trade to a sharp drop in both import and export trade.