30 January 2013

Nigeria: NSE Capitalisation Recovers N4 Trillion in 11 Months

The Nigerian Stock Exchange (NSE) has recorded a growth of N3.795 trillion in its market capitalisation in the last 13 months, following renewed investors' confidence in the stock market.

The market, which peaked at N12.624 trillion in March 2008, crashed to N6.275 trillion in November 2011. However, a consistent recovery, buoyed by sustained investor confidence, has lifted the capitalisation to up to N10.1 trillion as at last Monday, showing a growth of N3.795 trillion.

THISDAY checks showed that the N3.795 trillion recovery implied that the market had recovered about 80 per cent of its March 2008 value, leaving about 20 per cent to hit that level again.

Most of the gains were recorded last year with market stakeholders highly bullish that the recovery would continue this year. The market gained N2.441 trillion last year, it has soared by N1.126 trillion within the first month of 2013.

Speaking recently on the target of N155 trillion market capitalisation target by 2016, the Chief Executive Officer of the NSE, Mr. Oscar Onyema, expressed optimism on the target.

However, he noted that it also depended on certain factors including: Federal Government's successful unbundling of oil sector through passage of Petroleum Industry Bill (PIB) and encouragement of companies in the telecommunications and energy sectors of the economy to list in the market among others.

"When we gave the target, we say the number of things needed to be aligned. Government said they want to privatise power. We need the support of the government to ensure that the 16 utilities are listed with the telecom companies. The National Assembly should approve and pass the PIB to provide unbundling of companies and enable the oil majors to take positive decision. Activities in the oil and gas sector are slowing down because everybody is watching to see what is happening," Onyema said.

He said that as investor confidence measures implemented by the NSE mature, the exchange expected that a growth trend similar to that experienced in Q4 2012 would extend into 2013.

"On the fixed income side, we anticipate the relative attractiveness of FGN bonds will continue for local and global investors, as a result of record-high yields. With the upcoming inclusion of Nigerian FGN bonds in the Barclay's Emerging Market Local Currency Bond Index, this should keep the nation's bonds in the international spotlight. Furthermore, foreign issuers such as the International Finance Corporation (IFC) are expected to enter the Nigerian bond market this year," he said.

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