27 June 2016, Lagos — The Nigerian Stock Exchange, NSE, has facilitated the investment of N11.094 trillion in the nation’s capital market in the last 10 years, according to data obtained at the weekend. The data showed that the investments were made in equities and bonds.
It was also revealed that 2007, 2008, 2013 and 2014 accounted for the highest investments.
The years 2007 and 2008 were boom years for the Nigerian stock market before the bubble burst in 2009. Investors traded securities worth N2.379 trillion in 2007 and N2.086 trillion in 2008.
Following the global financial meltdown, which also impacted the Nigerian market, the value of trading fell to N686 billion in 2009. It improved to N797 billion in 2010 before declining to N634 billion in 2011.
The value of trading rose to N658 billion in 2012, while it jumped to N1.044 trillion in 2013 and N1.388 trillion in 2014.
However, it fell to N953 billion last year. Explaining the poor performance of the market in 2015, the Chief Executive Officer of the NSE, Mr. Oscar Onyema, said it was affected by factors such as political risk, currency volatility and uncertainty in global crude oil prices.
According to him, 2015 began with the continued depreciation of the naira against the dollar and uncertainty around the direction of economic policies, which fueled an already prevalent bearish sentiment in the Nigerian capital market.
“Like many emerging markets’ governments, the Federal Government of Nigeria is largely dependent on oil exports as its leading revenue source. Thus FGN revenue suffered extensively from sustained low commodities prices in the global market, as well as political and economic policy uncertainty leading up to and following the general elections held in April 2015. Sustained uncertainty in the country led to postponed decision making by business leaders in anticipation of clearer direction on economic policies, thus slowing economic activity,” he said.
In his address to members at the annual general meeting of the NSE last week, Onyema said the exchange illustrated its resilience during 2015 in generating an operating surplus before tax of N1.86 billion amidst prolonged economic uncertainty, diminishing commodity prices and volatile securities markets.
“This was driven by a business model that focused on budgetary prudence, complemented by heightened focus on strategy execution,” he said.
The NSE CEO said going forward, the goal is to reinforce the exchange’s business to take advantage of fluctuations in the market cycles.
“To this end, we will be intensifying our efforts to demutualise, and to develop the necessary infrastructure and framework to launch derivative products in our market. We believe demutualisation will strengthen the exchange’s operational agility and aptitude and that the derivatives will empower investors to create a stronger portfolio of uncorrelated products,” he said.
*Goddy Egene – Thisday