Charles Fakrogha, a stockbroker and Chief Executive Officer, Foresight Securities and Investment Ltd., on Monday said that the Market Capitalisation of the Nigerian Stock Exchange (NSE) declined by 13.03 per cent in 2014.
Fakrogha said that the market actually closed lower than what it started with in January 2014.
According to him, the NSE market capitalisation closed at N13.20 trillion as at Dec. 31, 2013 while it closed at N11.48 trillion as at Dec. 31.
“This indicates that the market capitalisation, which opened at N13.20 trillion on Jan. 2, closed at N11.48 trillion on Dec. 31, representing 13.03 per cent decrease in the 2014 financial year.
“Market capitalisation is a major driver of the capital market that determines the trends and positions of the market activities.
“As a result, a drop in it indicates that the market is on the downward trend and needs to be revised to the upward trend for better delivery,” he said.
Fakrogha identified the increase in Cash Reserve Ratio from 50 to 75 per cent in January 2014 as one of the factors responsible for the drop experienced in the capital market in 2014.
He said that the outbreak of Ebola, devaluation of naira, fall in crude oil prices and security challenges, among others were responsible for the poor performance of the economy in 2014.
“The year 2014 was very challenging. Some operators were about to lose their licences as a result of the new capital requirements and Minimum Operating Standard (MOS),” he said.
Fakrogha called on the regulators of NSE to establish good regulatory framework and effective communication with the operators, saying such would help to improve the market.
Source : BusinessDay