SEC, Stakeholders, Meet CBN Over Lingering Stock Market Meltdown
The management of the Securities & Exchange Commission (SEC) is expected to lead other stakeholders in Nigeria’s capital market on Wednesday to a parley with officials of the Central Bank of Nigeria (CBN), as part of efforts to find ways around the sustained decline in the basic indicators of the nation’s stock market.
At Wednesday’s meeting, the capital market stakeholders including the leadership of the various trade groups, according to a source, will seek ways to strengthen domestic institutional players to enable them withstand the shock that normally follows dumping of company shares as foreign investors exit Nigeria.
One of the discussion points likely to come up at midweek’s meeting is how to resuscitate the market maker project by retooling the previous guideline in line with current realities.
One of the major requirements at the time was that market makers must have the support of a strong financial power house, tagged “liquidity provider,” among others to be licensed for the role.
Data on domestic and foreign portfolio investments (FPI) on the NSE shows that total transactions rose from N935.26bn in first half 2017 to N1.597tr in first half 2018.
There were however more outflows than inflows, with net FPI deficit stood of N38.41bn, as against the N1.71bn net positive position in first half 2017. Foreign inflows and outflows stood at N380.65bn and N419.06bn respectively in first half 2018 compared with inflows and outflows of N215.97bn and N214.26bn respectively in first half 2017.
The report also showed that foreign portfolio investors have consistently remained the dominant group in the Nigerian equities market. It accounted for about N799.7bn of transactions in the first half of 2018, representing an increase of 85.9% over the N430.23bn recorded in the comparable period of 2017.
This was however slightly higher than the N797.47bn worth of equities traded by domestic investors, which was 57.9% increase on N505.03bn traded in comparable period of 2017.
The benchmark All-Share index of the Nigerian Stock Exchange (NSE), for example, has gone from being the best on Returns on Investment (RoI) in January across the globe, to becoming one of the worst. In the month of January, the NSE ASI closed at 44,343.65 basis points, after touching a high of 45,321.82bps from an opening figure of 38,243.19bps, while market capitalisation gained N2.29tr, closing at N15.9tr, from an opening value of N13.61tr, representing a 16.83% appreciation in value.
By Tuesday, August 14, 2018, the NSEASI closed at 35,288.23bps, representing a drop of 10,033.59bps or 22.14% from the January peak; while the capitalization has fallen from its peak of N16.08tr on Wednesday, January 17, 2018, representing a N3.196tr, or 19.88%.
The decline which began mid-January when the indicators peaked after a robust rise in 2017 as the nation’s economy emerged from recession in the second quarter of the year, is linked to the continued exit of the dominant foreign investors who are in search of safer havens.
Their exit is blamed on the charge polity ahead of the 2019 general elections, with politicians jostling for positions in the next government, resulting in incidences of cross-carpeting.
Only last week, officials of the Department of State Security (DSS) took over the premises of the country’s National Assembly (NASS), barring legislators from accessing the hallowed chambers.
Acting President Yemi Osinbajo, however swiftly doused tension created by the invasion by sacking the head of Nigeria’s secret police, while assuring that he as Acting President was neve briefed as expected before the invasion.
Comments
Post a Comment