Equity stakeholders in companies quoted on the Nigerian Stock Exchange (NSE) lost a whopping N2.49 trillion or 15.64 per cent between January and July, a development that experts attributed to the political uncertainty in the country.
Some financial experts who spoke on the huge loss attributed it to the political uncertainty, which has taken its toll on the bourse.
Available data from the exchange showed that market capitalisation, which closed at N15.895 trillion in January declined to N13.409 trillion in July.
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This was as the All-Share Index (ASI) lost 7,325.87 points or 16.52 pecent during the period under review, closing at 37,017.78 in July compared with 44,343.65 in January.
Prof. Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, while commenting on the trend noted that the performance of the market was dismal having eroded growth recorded in January.
Uwaleke said the market had remained bearish despite oil price recovery, stable exchange rate, retreating inflation and even improved companies fundamentals.
He, however, blamed the heightening political tension, insecurity from herdsmen and economic uncertainties arising from the delay in budget implementation for market downturn.
Uwaleke added that the spike in interest rates in the United States of America and to some extent, the US-China trade war also combined to swing the attention of foreign investors to US markets.
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Also speaking, Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, said the bearish trend was caused by movements in interest rates in the United States which resulted in withdrawal of money from the market by foreign investors.
“The seeming sustainability of the downward trend is caused by fear of local investors that they might be losing large amounts of money if they don’t sell off their securities now,” Tella said.
For his part, Mazi Okechukwu Unegbu, a former President, Chartered Institute of Bankers of Nigeria (CIBN), said security issues and the social environment were responsible for the negative sentiments in the capital market.
Unegbu said foreign investors, including portfolio equity holders pulled out their funds from the nation’s
market, ahead of perceived political tension that may be associated with 2019 general election in February.
He however said the real investment that impacts positively on the economy was foreign direct investment (FDI) in the productive sector not ‘hot money investment’ in the stock market.
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Unegbu said government must encourage local investors in the market by creating an enabling environment.
He also advised politicians should stop their daily political altercations in the media, which he said was fuelling fears among investors.
But, Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said the performance of the capital market has remained negative from February to date.