‘How to reposition economy, stock market for post-election performance’
For the nation’s capital market to attract the needed investment for economic growth post elections, experts have said the new government must show clarity and certainty of its agenda early enough and pursue inclusive environment to revitalise the middle class.
The experts noted that economic indicators always take negative path whenever it appears that the government is taking too long to signal its direction on policy issues.According to them, if government comes up with a clear blue print that would serve as a guide to both existing and prospective investors after elections, the market would react accordingly and stocks would ultimately head for their true values.
However, the experts warned that if government fails to provide a clear policy direction, particularly, after the 2019 polls, all efforts by the regulators to stimulate activities and boost investors’ confidence in the market would pare into insignificance.Indeed, the nation’s capital market has recorded unprecedented lull due to volatile foreign exchange and macro-economic challenges, as investors exited their positions, while speculators went on bargain hunting.
After posting a 26 per cent loss in 2016, the Nigerian equities market gathered momentum in 2017, with an increase of N4.5 trillion in market capitalisation, from N9.15 trillion on January 3, 2017, to N13.52 trillion as at December 28, 2017. The All-Share Index (ASI) also rose by 43 per cent during the period under review from 26, 616.89 points to 37,990.74 points.
The rally extended to the current financial year, as market capitalisation of listed equities stood at N13.62 trillion as at January 2, 2018, and rose by N2.1 trillion or 13.2 per cent to N15.69 trillion as at Friday, January 26, 2018. Also, ASI, which opened the year 2018 at 38,264.79 points rose by 5,508 points or 12.6 per cent to close at 43,773.76 points.
Surprisingly, after the January and mid-February rally, the market recorded unprecedented reversal in performance contrary to analysts’ predictions.The capitalisation, which stood at N15.55 trillion as at Wednesday, February 28, 2018, now stands at N11.76 trillion as at Thursday, November 8, 2018, representing N3,784 trillion or 32.2 per cent loss. Consequently, the ASI followed the trend, declining 11,100 points or 34.4 per cent to 32,228.50 points from 43,330.54 points achieved as at February 28, 2018.
The National President, Constance Shareholders Association of Nigeria, Shehu Mallam Mikail, who bemoaned the current state of the market, explained that the market may continue on this trajectory if government fails to come up with a clear blueprint that would serve as guide to both existing and prospective investors after the election.
“Most of the investors are wary when they do not know the way forward. Both local and foreign investors are waiting to see what will happen during and after the election.“There are no buyers presently for those that want to sell off. If the system is not put on clear path immediately after the election, just in 2015, we may not witness the expected growth in the market and the economy,” he said.
The Chief Executive Officer of Planet Capital Limited, Tony Anonyai, said for the capital market to play its pivotal role in moving the economy to the next level after election, the new government must give clear indications from the beginning, as to what its economic agenda is and how it plans to execute it.
“An economic agenda that creates a middle class that can now stay above average, catering for their daily needs, create money for transactionary purpose and be able to make investment in stock market and other portfolios,” he said.
The President of the Association of Stockbroking Houses of Nigeria, (ASHON), Patrick Ezeagu, said: “It depends on who wins the election and the post election events. If there is peace and the popular candidate wins, then the market would respond positively.“We have a large market here and I can tell you that this large market will be attractive to every body, but if there is crisis or the emergence of unpopular candidate, we are going to have issues with the economy and the market.”
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