• Tuesday, May 28, 2024
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BusinessDay

Nigerian capital market shows signs of stabilisation

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Investor confidence in the Nigerian capital market appears revitalised with the improved performance of quoted companies during 2012, which impacted on stock market prices last week and saw the market settling at a 4-year high last Friday, with equity market capitalisation closing at N11.225 trillion.

All vital performance values in the Nigerian capital market have bounced back from the critical low to which they backslid and have remained upbeat with the market capitalisation of the Nigerian Stock Exchange (NSE) increasing by over 60 percent in the past year alone.

Trade volumes on Friday increased by over 89 percent to 573.5 million shares compared with the previous day’s tally of 303.3 million , and the All-Share Index increased by 606.95 points to close at 35,109.33. Also, the value of shares traded during the day was up by 44.5 percent, from the N3.74 billion recorded on Thursday to N5.41 billion.

Despite certain prevalent, national and market-specific challenges that persisted all through the year, the Nigerian capital market was one of the top four performing capital markets globally in 2012 with the bourse’s major index closing the year with its strongest performance since 2008.

With the second quarter of 2013 underway, the Nigerian stock market has shown clear signs of stability as the market cap remained above the N10 trillion mark from late January 2013 till date, allowing the NSE yet again to outshine two of the major stock Exchanges in Africa – Kenya and South Africa, in its year-to-date performance, having maintained its upward trajectory in the New Year.

It could be recalled that local investors accounted for close to 60 percent of transaction value in the Nigerian capital market at end of first quarter 2013, while foreign investors were responsible for about 40 percent; this new turn of events contrast sharply with the circumstances between 2009 and the first half of 2012, when local investors eschewed the market on account of losses they sustained in the aftermath of the near meltdown of 2008 with transaction values being controlled by foreign investors to the tune of 80 percent in certain instances.

While the NSE’s focus over the last couple of years has been on cleansing, restructuring and making the market more accessible, the bourse in 2013 will continue with innovations centred on technology and product development, as well as on advocating changes to policy and continued financial literacy programmes alongside investor education.

By the end of 2013, the Nigerian bourse will have established its technology competitiveness, restored its regulatory soundness and advocated the policy changes necessary to enable the Nigerian capital market absorb the forces of change currently reshaping global financial markets and the global exchange landscape.

IHEANYI NWACHUKWU