$1trn capitalisation of Stock Exchange no longer feasible – Onyema



The dream of the Nige­rian Stock Exchange (NSE) to attain $1 tril­lion capitalisation across five asset classes by 2016 may have after all turned a mi­rage as its CEO, Mr. Oscar Onyema, said it is no longer achievable.

According to Onyema, who dropped the bombshell while presenting the 2014 Market Recap and Outlook for 2015, Wednesday in Lagos, going by the current situation in the mar­ket and the prevailing environ­ment in the country, the trillion dollar capitalisation may be as good as a wishful thinking.

He lamented that bearish sentiments prevailed in the capital market for most of last year as foreign investors divested from the market cit­ing currency risk. His words: “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. Several macro­economic developments also contributed to the decline in market performance. These 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; Nigeria’s declining foreign reserves; festering in­surgency in the nation; uncer­tainty around the upcoming 2015 elections and weak cor­porate earnings. The air of un­certainty that hovered around 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 to woo more local inves­tors.

He also promised to pro­mote the Nigerian capital market as an African hub for growth companies, imple­ment more competitive price structure in conjunction with regulators and other market participants.

He said the NSE would equally support reforms in the power, oil and gas sectors, the diversification of government revenue from oil as well as im­plementing the 10-year capital market master plan.

Enumerating its 2014 achievements, he said the NSE made history 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.”


Source : SunOnline

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