By Kelechi Mgboji Assistant Business Editor
Market capitalisation of the Nigerian Stock Exchange (NSE) dropped by N1.16 trillion from the first trading day of this year till March despite impressive earnings by listed financial institutions and industrial good companies.
Market capitalisation (the total market value of the shares outstanding of a publicly traded company) reduced from the N9.86 trillion with which the market opened in January to N8.7 trillion in March (Q1).
The All-Share Index dropped 11.6 per cent to close at 25, 306.22 basis points from 28,642.25 basis points.
Investors in equities lost 11.6 per cent of their investment in three months, added to an inflation rate of 11.4 per cent in February.
NSE market indices across the board closed negative, a reflection of a struggling economy and the government’s uncertain economic blueprint.
The Premium Index, Main Board Index, 30-Index, Banking Index, Insurance Index, Consumer Goods Index, Oil & Gas Index and Industrial Goods Index all closed negative in the first quarter.
Premium Index closed at 1,511.58 basis points, shedding 4.6 per cent; Main Board Index closed at 1,140.17 basis points, a loss of 14.8 per cent year-to-date; 30 Index ended at 1,108.6 basis points, falling 13.9 per cent from 1,287.67 basis points.
NSE Banking Index had the highest decline of 19.7 per cent to close at 215.47 basis points from 268.49 basis point. Insurance Index closed at 127.01 basis points, having lost 10.9 per cent; and the Consumer Goods Index closed at 615.49 basis points, shedding 17.5 per cent.
Oil and gas Index ended at 352.65 basis points, depreciating 1.1 per cent; and Industrial Goods Index closed at 1,961 basis points, shedding 9.5 per cent.
Market analysts attributed the dwindling capital market to profit-taking by foreign portfolio investors and the unstable monetary policy of the Central Bank of Nigeria (CBN).
Other factors include late passage of the 2016 budget and global dwindling oil prices.
The NSE had reported that the participation of foreign investors fell 15 per cent between January and February this year.
It put participation by foreigners at 51.57 per cent in January. But it dropped to 36.48 per cent in February.
Enterprise Stockbrokers Managing Director, Rotimi Fakayejo, said both local and foreign investors are still very cautious about participating in the capital market.
He explained that “the capital market in the first three months of 2016 has been battered with the worst economy situation. Also, the weakness of the naira has led to foreign portfolio investors’ exit.
“The volume and value traded within the first three months have dropped since investors confidence is yet to be restored.
“Despite impressive earnings and robust dividend by some listed companies, their share price continued to drop due to liquidity challenges in the capital market.”
He warned that the 2016 budget may not have an immediate impact on the capital market.
“Even though listed companies’ first quarter unaudited accounts will be out soon, I don’t foresee any tangible progress in the capital market until early October.”
