Nigeria Content Online

The market value of
quoted equities at the Nigerian Stock Exchange (NSE), year-to-date, has
recovered over N710 billion from the N2 trillion losses recorded last
year.

The market
capitalisation of the 215 listed equities, which opened the year at
N4.989 trillion, closed on Thursday at N5.699 trillion, representing a
14.23 per cent increase. Also, the All-Share index, which opened the
first trading day of the year at 20,827.17 basis points, closed
yesterday at 23,666.33; a 13.63 per cent growth.

Some analysts say
it is uncertain if the present positive outlook in the market will be
sustained due to some developments in the financial and political
sectors of the economy.

The Managing
Director of Financial Derivatives Company Limited, Bismack Rewane, said
the capital market should have performed much better if the political
situation in Nigeria was more stable.

Speaking at an
executive breakfast meeting, organised by the Lagos Business School,
last week, Mr. Rewane said the average daily turnover of approximately
N2.4 billion at the NSE resulted due to “the high political
uncertainty.”

The financial
analyst explained that the Nigerian stock market opened the year with
some strength, gaining 8.43 per cent in January, and remained stable in
February.

“The increased
level of political uncertainty may have impacted the early gains,” he
said. “A sustained rally will depend on renewed interest from local and
foreign institutional investors who still appear to be sitting on the
sidelines.”

Market outlook

Speaking more on
market outlook for the year, Mr. Rewane said, “Resolution of the
current political crises will provide further momentum in the stock
market,” adding that asset managers may embark on a diversification
strategy during the year, reshuffling portfolios in favour of
non-banking stocks.

“Buying
opportunities also exist in the banking sector given the record low of
price-to earnings ratios. Performance will be boosted by consolidation
and improved transparency and reporting standards,” he said.

In his own view,
the Deputy Managing Director of BGL Securities Limited, Wale Oluwo,
said, “Nobody can say specifically that the stock market will go back
to the level it used to be.” However, he said if the current rebound is
sustained by the third quarter of the year, “it will be safe to predict
accurately.”

Meanwhile, as the
actualisation of long awaited Asset Management Company looks realistic
with the bills establishing the company scaling the second reading at
the Senate on Wednesday, Mr. Olowo believes the equity market may fully
recovery next year.

Also, Mr. Rewane
said the new equity issues are expected in the second half of the year.
“Economic recovery will encourage under-capitalised companies to seek
fresh funds in the capital markets.”

According to him,
rounds of consolidation are expected in telecoms. “Success of the
Bharti-Zain deal will force other telecom majors to seek similar
acquisitions. Dangote and Benue Cement Company also on track for
consolidation,” he said.

Market turnover

Available report
from the Exchange shows that the total turnover during the first two
months of the year was 16.14 billion shares valued at N100.8 billion
exchanged in 429,306 deals. In the comparable period during 2009, the
market recorded turnover of 11.232 billion shares worth N66.8 billion
exchanged by investors in 289,389 deals.

The market value of
the 261 listed securities closed at N7.62 trillion on the last trading
day in February, up by 1.76 per cent from N7.5 trillion recorded in
January. According to the NSE, “The rise in market capitalisation can
be attributed to the rise in the prices of equities.”

Bond trading

A turnover of 1.4
billion units worth N1.64 trillion in 18,206 deals was recorded in
February, in contrast to a total of 1.15 billion shares valued at N1.31
trillion exchanged during the preceding month in 13,818 deals.

The most active
bond, measured by turnover volume, was the 6th Federal Government of
Nigeria (FGN) Bond 2029 Series 3 with traded volume 178.12 million
units valued at N249.5 billion and was followed by 4th FGN Bond 2014
Series 3 with a traded volume of 128.35 million units valued at N161
billion.