Another Bad News: Stock Market Shareholders Lose N1.15 Trillion in First Quarter

Forum 8 years ago

Another Bad News: Stock Market Shareholders Lose N1.15 Trillion in First Quarter

The Nigerian Stock Exchange (NSE), which stepped into 2016 on an unfavourable note, finished the first quarter with a loss of N1.146 trillion, according to the New Telegraph.

Available statistics show that activities on the floor of the Exchange skewed downward, as the market, which opened high at N9.850 trillion in capitalisation and 28,642.25 in index at the beginning of trading last January, closed yesterday at N8.704 trillion and 25,306.22 index points, representing a loss of about N1.146 trillion or 11.63 per cent year to date.

Despite the unprecedented bullish rally witnessed in the first two weeks of March, which ended with a gain of N441 billion, the low market sentiments worsened following investment apathy, as foreign and local investors remained on the sidelines.

Financial analysts believe some of these factors sent shock waves to both local and foreign investors and created uncertainty in the investment environment, leading to a retreat on the part of the bargain hunters.

The plunge in oil price has put Nigeria’s currency under pressure and dampened appetite for assets in Africa’s biggest economy and chief oil exporter, prompting the Central Bank of Nigeria (CBN) to intervene repeatedly to try to prop up the local currency.

According to a report from the Exchange, due to the massive exit of international investors, domestic investors outperformed foreign investors by 27.04 per cent, as domestic transactions increased from 48.43 per cent in January 2016 to 63.52 per cent in February 2016. Foreign Portfolio Investment (FBI) transactions however, decreased from 51.57 per cent to 36.48 per cent over the same period.

Total transactions at the nation’s bourse increased by 39.44 per cent from N84.10 billion recorded in January 2016 to N117.27 billion (about $0.60 billion) in February 2016. In comparison to the same period in 2015, total dealings decreased by 36.44 per cent from the N184.49 billion recorded in February 2015. According to the report, monthly foreign outflows outpaced inflows, which was consistent with the same period in 2015.

Nevertheless, foreign outflows increased by 20.79 per cent from N26.36 billion in January 2016 to N31.84 billion, while foreign inflows decreased by 35.68 per cent from N17.01 billion in January 2016 to N10.94 billion in February 2016.

The Chief Executive Officer, Financial Derivatives Companies (FDC) Limited, Mr. Bismark Rewane, said it was likely that the current downturn in the nation’s capital market would be sustained in the near term.