Analysis has revealed the Nigerian Stock Exchange (NSE) as the worst performing market in first quarter (Q1) of this year, pointing out the performance of the two key indicators to be far below average performance of other exchanges’ indices within the continent.
Specifically, the market capitalisation, which opened the year at N11.477 trillion plummeted by N759 billion to close Q1 at N10.718 trillion.
In the same vein, the NSE All-Share Index dropped by 2,912.33 points to close at 31,744.82 points on March 31, 2015 from 34,657.15 which it started the year.
The Nairobi Stock Exchange, Kenya, closed the first quarter of the year as the best performer in Africa’s stock market while Nairobi Exchange leaped by 7.3 per cent.
Similarly, the Nigerian stock market had dropped by 16 per cent in 2014. Findings revealed that three of the six leading exchanges on the continent recorded growths, while three also recorded decline.
Apart from Kenya that led with 7.3 per cent, the Johannesburg Stock Exchange closed the first quarter with a growth of 5.4 per cent, while Egypt Stock Exchange ended with a leap of 2.1 per cent. On the other hand, Mauritius Stock Exchange dipped by 4.3 per cent, while Ghana Stock Exchange shed 1.98 per cent.
However, analysts have pointed out that the Nigerian market was affected by the political and economic headwinds caused by the general elections and decline in prices of crude oil at the international markets.
The analysts stated that, “the uncertainties building up in the socio-political circles with growing economic pressure that resulted in the devaluation of naira could not be isolated from the factors responsible for this bearish trend. Moreso, whenever there is high uncertainty, market tends to react irrationally and most times with high premium.”
Analysts at Thaddeus Investment Advisors and Research further expressed concern about investors’ preference for the Kenyan market despite that Nigeria ranks better in some investment indicators.
They added that Nigeria’s 10-year dollar bond issued in 2013 now yields about 7.5 per cent while Kenya’s yields about 6.2 per cent as at last check.
Meanwhile, the NSE Chief Executive Officer, Mr. Oscar Onyema, during the 2014 recap and outlook for 2015 event held in Lagos said it is not all doom and gloom for the stock market this year, stating that even as many anticipate volatility through the first half of the year as some stock prices are at their lowest since the May 2013 sell-off, some are below book value, thus, presenting domestic investors with no currency risk, an opportunity for cautious long-term investing.
He said, “we expect that as the year progresses, underpinned by a successful election with no or low levels of violence, a tighter grip on the security situation in north-eastern Nigeria, and a more certain macroeconomic outlook for oil prices, interest rates and the naira, the market’s attractiveness could improve significantly.
