Shareholders in the Nigerian Stock Exchange lost about N510 billion during transactions at the bourse in 2016, as market capitalisation dropped from N9.757 trillion as at January 4, 2016 to N9.247 trillion at the end of December, 2016. Also, the All-Share Index decreased from 28,370.32 to 26,874.62, within the same period. Market operators blamed the development on some lapses on the part of the Federal Government.
The President, Chartered Institute of Stockbrokers, Mr. Oluwaseyi Abe, told The Point that lack of clear foreign exchange policy and directions were the major causes of the setback the market suffered in 2016.
“As far as I am concerned, government lacks the direction to manage the money market and that negligence frustrated the economy and the capital market, because it is the barometer of the economy,” he said.
The Managing Director, Capital Bancorp, Mr. Aigboje Higo, noted that the major indicators of the market were pulled by the pressure of the economic recession that hit the nation between the first and second quarter of the year, with a negative growth of -2.1 per cent.
According to him, the economic recession reduced disposable income, as a lot of people became unemployed and broke and instead of saving, the victims of the lull rather subscribed to profit taking, abandoning their shares on the floor of the stock exchange.
“The high inflationary rate, treasury bill rate and frustrations of the real sector pulled the indicators and created a negative impact on the number of companies that were quoted. Foreign investors also left the market because of the forex policy crisis,” he stated.
The Chairman, Nigerian Shareholders Renaissance Group, Mr. Olufemi Timothy, however, urged NSE management to improve the price mechanism of the Exchange so as to improve the plight of investors.
“If most stocks are still priced and traded below value, then investors should not hope for any improvement in the New Year, as such development scares investors from the market,” he said.
On what investors should expect in 2017, the operators expressed optimism that the New Year would bring good tidings to all stakeholders. Higo said, “Since oil prices have gone up, with a better security in the North-Eastern part of the country, the economy will soon rebound and more companies will sell their products in the region, thereby improving their performances.
“Investors should be hopeful that the forex policy will change to make it more flexible to encourage more investment in the country. Investors should be hopeful that 2017 will be a better year ahead, because if you look at 2016 against 2015, you will see that 2016 was better because in 2015, the market was down by 17 per cent compared to the 7 per cent recorded last year.”