BY OMODELE ADIGUN AND CHINENYE ANUFORO
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