The Nigerian equities market shed N281 billion in market capitalisation in February following persistent bearish trading. At the close of trading yesterday, which was the last day of the month of February, the Nigerian Stock Exchange (NSE) market capitalisation stood at N8.765 trillion, down from N9.046 trillion at the beginning of the month. Similarly, the NSE All-Share Index (ASI) shed 3.6 per cent in February, declining from 26,289.95 to close at 25,329.08
Market operators have said the bearish trend witnessed in 2016, would continue into 2017 due to headwinds that have dampened investor demand for equities.
High rates of returns in fixed income have attracted most investors to that sector of the market, while foreign exchange challenges have discouraged many foreign investors from the market.
Besides, poor earnings by some companies engendered by the challenging operating environment have equally been a drag on the market.
Analysts at Meristem Securities Limited, an investment banking firm, had said in 2016, the market sentiments waned under continued pressure from a barrage of negative news flows such as persistent inflationary pressure, and the paucity of foreign exchange (FX), which consequently led to the further depreciation of naira against major currencies.
Speaking on the activities of the equities market in 2017, they said the market would remain weak in the first half of the year on the back of subsisting macroeconomic uncertainties, while they anticipate a modest recovery towards the tail end of the year.
“However, we note that market recovery is partly hinged on stability in the fx market and moderation in exchange rate gap between the interbank and parallel markets. Based on our mix of methodologies, we arrived at a 2017 index level of 27,812, 50, indicating a +3.49 per cent potential market return by December 31, 2017,” they declared.