Nigerian Equities Market Grows by N11.174 Trillion in 30 Years
Goddy Egene
The Nigerian equities market has recorded a highly impressive growth in the last 30 years despite its recent volatility, indicating that it has created many millionaires in the last three decades. The market grew by N11.174 trillion or 2,208 per cent in capitalisation between 1985 and last Friday. It rose from N506 billion in 2005 to N11.68 trillion. The Nigerian Stock Exchange (NSE) All- Share Index recorded a higher growth in percentage terms, jumping by 30,880 per cent from 111 points in 1985 to 34,277.21 last Friday.
Commenting on this growth, analysts at Meristem Securities Limited, the equities market had undergone diverse episodes over the last three decades.
“Some of the factors shaping the market trajectory include business cycles, technology, market regulation, financial literacy and innovation, degree of openness of the economy and financial markets, and demography among others,” they said.
Meanwhile, the MSL analysts have allayed the fears of a repeat of the 2008 market crash, saying the present reality in the Nigerian equities market does not appear to suggest such crisis.
In a special report made available to THISDAY, MSL said financial markets are an integral part of the economy, and thus are subject to market cycles, as the economy inevitably oscillates through cycles.
“For every market bust, there would have been a boom which was overstretched into a bubble. A pertinent question to ask is therefore; ‘When are the seeds of market booms sown?’ Considering the 2007 financial crisis, whose immediate cause was the contagion from global markets, which brewed with an already overvalued domestic market, the following factors are pinned down as some of the remote causes of the crisis. A too-accommodative global monetary policy environment, which fueled cheap credit and ‘easy money, influx of foreign funds into emerging markets due to asset re- allocation to higher yield environments, domestically, Nigerian banks threw caution to the wind and took on exposures that contravened some prudential guidelines, leading to crystallization of concentration risk in the stock market, and the oil and gas sector (the first set of victims of the crisis) and eventually, high and rising Non-Performing Loans (NPLs) and weak regulatory oversight,” they said.
However, they said the