Stock Market Investors Lose N897bn in Eight Months

Equities market investors have lost N897 billion as at the end of August as politics continues to impact negatively on the market.

THISDAY checks showed that market capitalisation, which measures the worth of equities, has depreciated from N13.619 trillion at the beginning of the year to N12.722 trillion last Friday.

This indicated a loss of N897 billion or 6.5 per cent in eight months.

The Nigerian Stock Exchange (NSE) All-Share Index even recorded a higher decline of 8.88 per cent, having dipped from 38,243.19 at the beginning of the year to 34,848.45 last Friday.

A further analysis of the NSE year-to-date performance showed that the Nigerian bourse has delivered the worst decline among the leading African bourses.

It was followed by Johannesburg Securities Exchange with a decline of about 0.11 per cent.

Ghana Stock Exchange is leading with the best growth of 8.02 per cent, followed by Egypt with 6.5 per cent, Mauritius 1.06 per cent and Kenya 0.64 per cent.

However, market analysts said the negative performance by the NSE was not a surprise considering the fact that foreign investors have been taking flight since the hike in rates in the United States.

They added that some investors have also been selling down to guide against negative impact of the forthcoming general elections.

While some investors have remained confident in the strong fundamentals of the market, such confidence has been challenged by developments in the political scene in the last one month.

The developments include defections from political parties and utterances capable of heating up the polity.

The Association of Stockbroking Houses of Nigeria (ASHON), the umbrella body for the chief executive officers of stockbroking firms last week raised the alarm that the utterances of political class were causing the exit of more investors from the capital market.

“For the umpteenth time, we strongly appeal to the political class that rather than indulge in unwholesome activities, actions, attitudes and destructive utterances, they should support all efforts aimed at creating the much-needed enabling environment for accelerated economic growth and development,” ASHON warned.

According to the association, the unguarded activities and unrestrained utterances of politicians are heating up the polity with dire consequences on the economy as a whole and the capital market in particular.

“Perhaps we may remind the political class that uncertainties and all sorts of insecurities that currently pervade our country affect investors’ sentiments, asset valuations, market and country risk profile and portfolio allocation decisions.

“In recent times, trading statistics on the securities markets in Nigeria have been reflecting investors’ apathy to unprecedented level of tension that portends likely breakdown of law and order in the 2019 general elections,” it said.

ASHON explained that it is an unassailable investor-behaviour that bad news trigger market panic and investors over react to such news, adding that innocent investors watch helplessly as their investments are plundered by the bearish market exacerbated by prevailing uncertainties in the polity created by the political class.

Nigeria has continued to reflect investors’ apprehensions to instability in the political and economic landscape through all their indices.

“This has largely accounted for the inability of our market to fully recover from the effects of the 2008 financial crisis, notwithstanding the efforts made by the regulators and operators to fully revive the market. There is clear and present danger if the trend continues,” it said.

The stockbrokers said foreign portfolio investors and their indigenous counterparts have embarked on massive sell down of shares and other financial instruments with attendant effect of gross erosion of values despite stellar performances of many listed securities.