Investors lose N2.2trn as equities take a beating

Equity holders at the Nigerian Stock Exchange (NSE) were worse-off in last year’s value erosion at the capital market.

Out of N2.2trillion lost from the capital market in 2014, N1.74trillion related to equity investors, while N470billion resulted from loss in the value of listed bonds on the Exchange.

The total market capitalisation of the Nigerian bourse, which stood at N19.08trn ($119.41 billion) in 2013 dropped to N16.88 trillion ($90.68 billion) as at end of 2014, an indication of 11.53% lost in naira terms.

Equities market capitalisation, which stood at N13.23 trillion ($82.80 billion) in 2013 dropped to N11.49 trillion ($61.72 billion) in 2014, indicating 13.15% decline.

Also in 2014, bonds market capitalisation dropped to N5.38 trillion ($28.93 billion) from N5.85 trillion ($36.561 billion) in 2013, an indication of 8.03% value loss in naira terms.

The NSE All Share Index dropped from 41,329.19 points to 34,657.15 points, down by 16.14%.

The Nigerian Stock Exchange closed the year with five new equity listings – two on the Main Board, one  on ASeM, and two ETFs, while the Bond market recorded 12 new listings with a slight dip in the value of new issues. 

The NSE was admitted as a full member of the World Federation of Exchanges (WFE), while the first phase of the West African Capital Market Integration (WACMI) programme is well underway, with the successful launch of direct market access (DMA).

The NSE made history by becoming the first African stock exchange to join the Intermarket Surveillance Group (ISG), and welcomed a new president and six  Council members to its National Council.

Oscar Onyema, Chief Executive Officer, Nigerian Stock Exchange, who reviewed the market in 2014 and presented the outlook for 2015 yesterday, said “In the capital market, bearish sentiments prevailed for most of the year, as 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 off its quantitative easing (QE) policy.”

Onyema observed that 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 the CBN’s monetary policy changes introduced at various points throughout the year; Nigeria’s declining foreign reserves; festering insurgency in the north; uncertainty around the upcoming 2015 elections; and weak corporate earnings,” Onyema said.

In 2014, the NSE National Council (Board) approved a revised 2019 NSE Corporate Strategic Plan, detailing the Exchange’s new growth strategy for the next five years, leading to 2019.

This revised strategy seeks to position the Exchange as the market for entrepreneurial growth. With key revisions to specific targets, the NSE began executing the 2019 strategy, focusing  on initiatives aimed at achieving the Exchange’s three  strategic objectives –which are: increase the number of new listings across five  asset classes; increase order flow in the five asset classes; and operate a fair and orderly market based on just and equitable principles.

Iheanyi Nwachukwu