SAN FRANCISCO, January 15, (THEWILL) –The Nigerian capital market has lost over $30bn from July 2014 to date, the Chief Executive Officer, Nigerian Stock Exchange, Mr. Oscar Onyema, has revealed.
Onyema disclosed this at the NSE 2015 Market Recap and Outlook for 2016 event held in Lagos where he stated that other factors that contributed to the loss apart from the persistent oil fall were volatile foreign exchange, currency slide, macro-economic concerns and political risk.
He listed the three biggest contributors to the global slowdown as normalisation of monetary policy by the US Federal Reserve; slump in commodity prices and slowdown in China.
According to him, the performances of the market indices are reflections of scenarios in the wider economy, but pointed out that the current state of the market was creating challenges as well as opportunities for existing and would-be investors.
“The Nigerian stock market has already lost $30bn since July 2014. Among emerging markets, recession has materialised in Brazil and Russia, and the trend is likely to continue amid weakening oil and other commodity prices,” he said.
“In Sub-Saharan Africa, while the recent performance of Nigeria and South Africa has been lacklustre, the overall region has weathered the commodity slump better than Latin America and elsewhere, with growth slated at 4.3 per cent in 2016, up from 3.8 per cent in 2015.
“This growth is expected to be supported by the moderate recovery in the global economy and growth in low-income developing countries, which compared to 2015, are projected to grow by one more percentage point to 5.8 per cent in 2016.”
Onyema said uncertainty and volatility dominated the forecast for this year and beyond as Nigeria struggles with commodity price shocks and the resultant impact on the naira.
He however added that the capital market had an opportunity to effectively finance the Federal Government’s proposed budget deficit for 2016 and the implementation of its Medium Term Expenditure Framework, adding that with greater clarity on policy direction.
“We anticipate the return of investors who had remained on the sidelines throughout 2015,” he said.
“This return is predicated upon the return of investor confidence as a result of effective implementation and communication of the government’s economic blueprint; credibility in monetary policy stance; relative stability in the macro economy (oil price stability above benchmark targets and increase in tax collection to Gross Domestic Product ratio, among others.); and improved security.”
Onyema said the NSE would focus on executing strategies to provide a credible platform for financing the economy.
Story by David Oputah
