Following the unveiling of the new foreign exchange guidelines by the Governor of the Central Bank of Nigeria, Godwin Emefiele, on Wednesday, the Nigerian stock market recorded a huge gain of about N760bn. The All-Share Index (ASI), market turnover, share volume and deals also recorded significant growth.
Between Tuesday and Friday, the Nigerian Stock Exchange ASI rose from 27,034.05 basis points to 29,247.27 basis points, the market turnover increased from N2.424bn to N6.791bn, the share volume rose from 170.686 million to 628.752 million and the number of deals appreciated from 3,153 to 5,965.
Prior to the three-day gains recorded last week, the NSE market capitalisation, which is the total market value of the shares outstanding of a publicly traded company, stood at N9.28trn on Tuesday. But as of Friday, which was the last day of trading last week, the value had risen to N10.04trn.
It will be recalled that the Nigerian stock market had gone into bad shape since President Muhammadu Buhari became president of the country. According to available data, the market crashed by N1.732trn in one year. At the beginning of 2015, the NSE market capitalisation was N11.66trn while as of May 27th 2016 the market capitalisation was N9.93trn.
NSE in 2016 at a glance
Prior to the unveiling of the new foreign exchange guidelines by the CBN, 2016 had not been a good year for the Nigerian stock market as it recorded a fall in market capitalisation. This was as a result of the economic issues affecting Nigeria; from the fall in global oil prices to China’s economic slowdown and not forgetting the stringent monetary policies put in place by the government. These policies have affected investor confidence in the country and also prompted a fall in the stock market.
According to industry analysts, the Nigerian Stock market feeds on information. Once there is a negative information it affects the market drastically and vice versa.
As of the first quarter in 2016, Equity Investors in the country’s capital market, lost over N1.053trn. In the first three months of 2016, the equities market depreciated by 10.79 percent. As of January 4th 2016, the first day of trading this year, the NSE market capitalisation stood at N9.757trn, while the All-Share Index was 28,370.32 basis points. But, as of March 31st, the market capitalisation and All-Share Index had crashed to N8.704trn and 25,306.22 basis points respectively. Equity investors in the country’s capital market had, in the first seven trading days of 2016, lost N804trn of their investments worth, as the market capitalisation closed at N8.953trn. The All-Share Index also dropped from 28,370.32 basis points recorded on the first day of trading in the year to 26,034.94 on the seventh trading day.The market capitalisation of the NSE fell by N811bn in the first 10 weeks of trading this year. The NSE market capitalisation dropped from N9.75trn on January 4th, 2016 to N8.939trn 10 weeks into the year.
It is also worthy to note that last year, investors also made huge losses in the Nigerian equities market. The market capitalisation for equities on the NSE lost a total of N2.354trn between December 2014 and December 2015.
