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NSE capitalisation falls to N10.97tn as bear run persists

By on December 5, 2014

The market capitalisation of Nigerian equities market dipped to N10.979 trillion yesterday as stocks continue to melt under the heat of massive sell-offs by investors.  The Nigerian Stock Exchange (NSE) All-Share Index closed 0.88 per cent lower at 33,255.67 to book a year-to-date decline of 19.53 per cent.
Since the beginning of the new month, the market has maintained a downward slide, as investors began to react to the reality in the financial markets following decisions taken by the Monetary Policy Committee (MPC) a week ago.  Between Monday and yesterday, the market has lost N425 billion in capitalisation.
At the N10.979 trillion, the capitalisation has dipped to the level it was 20 months ago.  The last time the market stood  below N11 trillion was April 2013.  However, after climbing to above N13 trillion, the market value has depreciated to N10.975 trillion following persistent bear run that began in the last two few months of the year.
Market operators and analysts had said the market would witness a decline as a result of MPC’s decisions that are expected to drive some  investors from equities market to fixed income securities market.
The MPC last week raised the cash reserve ratio (CRR) on private sector deposits  by 500 basis points from 15 per cent to 20 per cent with immediate effect, a development that is expected to reduce the amount banks can lend to customers and  increase their bottom-line.
Before the pronouncements by MPC,   the market had come under heavy sell pressure due to the  exit of foreign and domestic investors, who were  said to the raising concerns over  the uncertain political environment, falling oil prices and poor results declared by many companies for the third quarter ended September 30, 2014.
Also analysts  at Meristem Securities Limited, had  said the  sustained fall in oil prices in recent times continued to arouse anxiety over Nigeria’s political, financial and economic space, as government and other key stakeholders evaluate the possible impact of low prices on the nation’s economic and financial stability.

 

[ThisDay]