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Equities Market sheds N1.748tn to close 2014 at N11.478tn

By on January 2, 2015

As has been indicated, the Nigerian equities market closed 2014 on a negative note after recording growths in 2012 and 2013. At the close of trading for the 2014 year on Wednesday, the benchmark index, the Nigerian Stock Exchange (NSE) All-Share Index dipped by 16.1 per cent to close at 34,657.15, while   market capitalisation shed N1.748 trillion to close at N11.478 trillion.

Although the market had shown a sign of marginal growth this year,  an unprecedented bear run in the last quarter led to decline in the prices of many blue chips that eventually resulted in the 16.1 per cent dip. The market had appreciated by over  47 per cent in 2013 before the decline in 2014.

Reviewing the performance of the market in 2014, the Chief Executive Officer of Finawall Capital Limited, Mr.  Tunde Oyekunle,   attributed the negative trend to  some reasons including United States quantitative easing  programme, increase  Cash reserve ratio on public sector funds from 20 per cent to  75 per cent for banks by the Central Bank of Nigeria, the security  and political risk and the sharp drop in the price of crude oil to as low as  $60 per barrel.

Assessing factors that led to the negative performance of the market,  analysts at Meristem Securities Limited, an investment banking services provider, cited   tight political outlook, monetary  policy regulatory uncertainties, declining  oil prices, weakening local investors’ confidence, and  pressure on the naira.

According to them, presently, the situation in the country seems to be heightened by the tightening political tensions as we approach the general elections in pressure on naira.

“The unending insurgency perpetrated by the Boko Haram in the north east compounds the situation. Foreign/institutional investors are weary of the outlook; hence, capital flight is on the rise,” they said.

The analysts explained that against its body language of a gradual rate reduction post-2015 elections, the Central Bank of Nigeria  is currently faced with macroeconomic  challenges bothering on dwindling oil revenue and forex  devaluation. They also explained that Nigeria’s economic fundamentals are  threatened by declining oil price in the global market.

 

[ThisDay]