Investors lament free fall in share prices, ASI loses 24%
Stock market investors lost values worth more than N2.8 trillion to uncertainties and tension within the nation’s political space
This is against expectations by some analysts that the positive trend witnessed in the capital market in 2017, would spur market activities in 2018.
The loss, in a six-month period, derived from the difference between N15.549 trillion market capitalisation recorded at the end of transactions in February 28, 2018 and market capitalisation, at the close of transactions, as at the end of August, at N12.722 trillion.
This is N2.827 trillion or 22 per cent loss.
Also, the All-Share Index (ASI) declined by 8,482.09 points or 24 per cent to 34,848.45 points from 43,330.54 points achieved as at February 28, 2018.
Investors, who are currently counting loses, urged politicians to desist from unguarded utterances capable of heating up the polity and impacting negatively on the stock market.
Specifically, the Association of Stockbroking Houses of Nigeria (ASHON), in a letter signed by the General Secretary, Sam Onuokwe, stated categorically that the political tension and uncertainties witnessed in the country is currently affecting investors’ sentiments, asset valuations, and portfolio allocation.
According to the group, foreign portfolio investors and their indigenous counterparts have embarked on massive share sell off and other financial instruments, despite improved performances of many listed securities.
The group urged the political class to moderate their activities and utterances by acting in such a manner that will boost investors’ confidence and grow the economy.
The association also suggested that the political class, rather than indulge in unwholesome activities and destructive utterances, should support all efforts aimed at creating the much-needed enabling environment for accelerated economic growth and development.
“We wish to express our appreciation to numerous investors in our markets for their resilience and confidence in the Nigerian economy and urge them not to panic.
We are confident that the on-going downswing on the securities market will be short -lived, as our market fundamentals remain strong.
“Shares of many listed companies are undervalued, selling below their intrinsic values.
There can be no better time to beef up portfolios in anticipation of superior Returns On Investment (ROI),” the association noted
After the January and mid February rally, the market recorded unprecedented reversal in performance, contrary to analysts’ predictions.
The stakeholders who spoke in an interview with The Guardian argued that the market is steered by the fallout of electoral activities, which triggered massive sell-off and cause further damage to the entire stock market.
They noted that there are strong indications that the political situation would be worse, noting that this unprecedented level of tension portends likely breakdown of law and order in the 2019 general elections.
According to the stakeholders, the trend is expected to continue in the second half of the year, even as elections are likely to dominate near-term activities, thereby inducing greater economic uncertainty and distraction in policy formulation and governance.
These projections have aggravated a widespread apathy to investments, especially on the part of the foreign investors.
The President of Progressive Shareholders Association, Boniface Okezie, said: “The markets will continue to slide downwards in the months to come, because we have learnt nothing at all after the meltdown, compared to other countries, with their economies now doing pretty well in all ramifications.