Yemisi Izuora/Ijeoma Agudosi
The Nigerian Stock Exchange(NSE) is no longer sure of attaining the $1trillion
capitalization across five asset classes which it anticipated to achieve by 2016.
Chief Executive Officer (CEO) of the exchange Mr. Oscar Onyema while presenting the
2014 Market Recap and Outlook for 2015 in Lagos noted that current situation in the market and the prevailing environment in the country may not allow the capitalization to come to fulfillment.
Onyema observed that bearish sentiments prevailed in the capital market
for most of the year as foreign investors withdrew from the market due
to currency risk.
According to him, Foreign investors steadily withdrew from
the Nigerian market due to currency risk and the recovery of developed
economies, and the effects of the US Federal Reserve tapering of its
quantitative easing (QE) policy.
He further added that several macroeconomic developments
also contributed to the decline in market performance, which include fall
in crude oil prices and related pressure on the Naira, the impact of
CBN’s monetary policy changes introduced at various points throughout
the year, declining foreign reserves.
Others include, festering insurgency, uncertainty around the upcoming 2015 elections and
weak corporate earnings.
The CEO noted that uncertainty that hovered over the
Nigerian capital market throughout 2014 caused investors to
increasingly adopt a ‘flight to quality’ strategy.”
However, this notwithstanding, he promised that the Exchange would
focus on increasing local investors’ participation during this year.
Onyema explained that the Exchange planned to achieve this through
strategic campaign tp woo more local investors.
He also promised to promote the Nigeria capital market as an African
hub for growth companies, implement more competitive price structure
in conjunctions with regulators and other market participants and assured that the NSE would equally support reforms in the power, oil and gas sectors, support the diversification of government revenue from oil as well as implementing the 10-year capital market master plan.
Onyema said the NSE made history last year when it
became the first African stock exchange to join the Inter-market
Surveillance Group (ISG), an international group comprising securities
exchanges, market centres and market regulators that perform
front-line market surveillance within their respective jurisdictions.
“Admission of the NSE is an indication that the Exchange’s surveillance capacity is in line with international standards”, he said.
He added that following a claims verification exercise initiated in
2013, the first and second batches of claims verified under the rules
of the Investor Protection Fund (IPF) – 343 in total – were approved
for payment in December 2014. “Payments will be made following the
verification of claimants’ identities by external consultants engaged
by the Board of Trustees of the IPF. The maximum payout is N400, 000
per claim.
“And despite the market’s sharp downturn in 2014, it is not all doom
and gloom for 2015. Although many anticipate volatility through the
first half of the year, some stock prices are at their lowest since
the May 2013 sell-off, and some are below book value, thus, presenting
domestic investors with no currency risk, an opportunity for cautious
long term investing.”
Onyema explained that as the year progresses, underpinned by a
successful election with no or low levels of violence, a tighter grip
on the security situation in north-eastern Nigeria, and a more certain
macroeconomic outlook for oil prices, interest rates and the naira,
the market’s attractiveness