By Kelechi Mgboji
Assistant Business Editor
Huge losses at the Nigerian equities market have continued with investors losing N1.24 trillion in the four months to April.
The Nigerian Stock Exchange (NSE) market capitalisation (total market value of the shares outstanding of a publicly traded company) dropped from N9.86 trillion to N8.62 trillion closing transaction in April.
With the drop in market capitalisation, the All-Share Index also dropped 12.5 per cent to close at 25,062.41 basis points from 28,642.25 basis points the equities at which the market opened this year.
Other market indices like NSE Main-Board Index dropped 16.1 per cent from 1,337.85 basis points to 1,121.94 basis points.
NSE 30 Index closed at 1,098.2 basis points, down 14.7 per cent from 1,287.67 basis points at which the market opened this year.
NSE Banking Index closed at 235.3 basis points, shedding 12.4 per cent by April; NSE Insurance Index closed at 132.69 basis points, with a loss of 7 per cent year-to-date.
NSE Consumer Goods Index ended at 611.05 basis points, falling 18.1 per cent from 746.19 basis points it opened with this year.
NSE Oil/Gas Index decline 11 per cent to close at 317.26 basis points from 356.56 basis point while NSE Industrial Index stood at 1,843.99 basis points, dropping by 14.9 per to 2,166.7 basis points.
NSE market indices across the board closed negative, a reflection of the struggling economy, increased inflation, and the delay in implementing the federal budget.
These factors impinge on listed companies’ share prices, attributed to decline revenue, hike in operating expenses that led to poor profits in the first quarter of 2016 (Q1 2016) unaudited accounts.
Stakeholders also blame the dwindling capital market on profit-taking by foreign portfolio investors, unstable monetary policies of the Central Bank of Nigeria (CBN), and global dwindling oil prices that affect listed oil and gas companies.
But they expressed optimism that the passage of 2016 budget would spur liquidity in the economy, as well as actions that would enhance the economy and boost the stock market in particular.
Enterprise Stockbrokers Managing Director, Rotimi Fakayejo, said investors, local and foreign, are still very cautious about participating in the capital market.
He noted that the weakness of the naira at exchange rate market has worsened the national economy situation.
“The capital market in the first four months of 2016 has been battered with worst economy situation. Also, the weakness of the naira has led to foreign portfolio investors exit.
“The volume and value traded within the first four 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,” Fakayejo added.
He said the 2016 budget may not have a direct impact on the capital market until early October.
Progressive Shareholders Association of Nigeria (PSAN) Chairman, Boniface Okezie, said: “The decline in our market is not only affected by factors within the economy but also global issues.
“The fall in global oil price has been a major factor affecting the Nigerian economy. So our market has been resilient, though there are issues the regulators in our market need to address.
“When a finger of an investor is burnt, he or she will be careful to release his or her other fingers to be burn. That is what is really affecting the market.
“The decline we are experiencing in our market is somehow normal as some investors are selling their shares to meet up with other expectations.
“But there is hope that the market will rebound once investors see a clearer picture of the federal government‘s policy direction.
“The Buhari administration has started fighting corruption and tackling insecurity. So these are some of the things that will attract investors to our economy.”
