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Market Digest Nigeria

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Nigerian stock investment yields N2.21trn in H1

For investors in the Nigerian stock market, the first half (H1) of year 2017 has been a boom period with relatively impressive Return on Investment (RoI). Trading activities on the floor of the Nigerian Stock Exchange (NSE) between January 3which was the first trading session this year and Friday June 30, have yielded profit to a tune of N2.205 trillion. The NSE All-Share Index (ASI) has improved with additional 6,242.86 points, representing 23.23 per cent growth to close at 33.117.48 absolute points as at the close of the second quarter on Friday. With the recorded profit, market capitalisation has equally soared by 23.85 per cent within the trading period of six month to now stand at N11.452 trillion. Market players have described the market performance as impressive, given that the year commenced on the negative record of 2016, when the ASI and market capitalisation closed on the red territory by -7.53 per cent and -6.13 per cent respectively.

According to the Chairman, organising committee on national workshop of the Charter Institute of Stockbrokers (CIS), Alhaji Umaru Kwairanga, the capital market has been on a rebound in 2017, especially, from the end of the first quarter till now. It will be recalled that the market initially ran bearish at the beginning of the year before the bulls eventually dominated activities on the nation’s bourse toward the beginning of Q2. While activities in Q1 ended negative by -6.56 per cent, investors’ confidence returned gradually in Q2 to close the quarter higher by 29.79 per cent which brought the Yea-to-Date (YtD) return on the equities index to 23.23 per cent. Just as the ASI, all other indices for the sub-sectors of the market also posted improved performance in the H1 with exception of NSE ASeM which depreciated by -1.27 per cent. Analysts have ascribed the growth recorded within the period to factors such as the recent initiatives taken by the Central Bank of Nigeria (CBN) to solve the problem of chronic scarcity of foreign exchange (forex). According to them, the initiatives have boosted the economy and the impact has been mirrored by the capital market. Despite the rebound, foreign investors have not yet taken full position in the market as Nigerians or locals still dominate active participation on of active stocks that recorded impressive volume spike within the period.

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Foreign investors became alerted to withdraw from the Nigerian capital market following the persisting chronic forex challenge in the country. “Participation in our capital market has been slightly skewed in favour of foreign portfolio investors for most of the past decade and this category of investors refused to participate in the Nigerian capital market while the forex issues persisted,” Kwairanga said. Meanwhile, market analysts have expressed optimism that with the ongoing efforts by the CBN to relief forex scarcity in the country, coupled with various initiative s, such as improving ease of doing business, by the Federal Government (FG), foreign investors would return and the market will have better story to tell in Q3 and Q4. “Our prayer is that the government, the Central Bank of Nigeria (CBN) and other regulators remain consistent in their resolve to tackle the issues that have held our economy and this great country’s potential down in recent years. That will definitely boost investor confidence further and guarantee stability,” analysts have said.

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