The year 2018 was not so rosy for the Nigerian Stock Exchange (NSE) as its crucial indicators depreciated by 19.77 per cent due to uncertainties surrounding the forthcoming general elections.
The News Agency of Nigeria (NAN) reports that the exchange which was named the third best performing stock exchange in the world in 2017 with over 43 per cent return-on-investment performed dismally in 2018.
Experts said the market, which started the first quarter on a positive note, nosedived due to the withdrawal of funds by foreign portfolio investors (FPIs) who were worried over the forthcoming elections.
A breakdown of the foreign investment outflow from the exchange between January and September 2018 showed that a total of N513.49 billion left the country during the period.
This amounted to 63 per cent increase in total outflow compared with N315.04 billion withdrawn in the same period in 2017.
Although both total foreign investment inflow and outflow increased month-on-month in September relative to the previous month, outflow grew at a higher speed, rising 27.6 per cent to N43.78 billion from N34.31 billion in August.
Foreign investment inflow, on the other hand, rose by 10.6 per cent to N40.54 billion from N36.7 billion in the previous month.
Investment experts, who attributed the sell-offs and the attendant foreign investment outflows to political risks, said the trend would be sustained throughout the election period.
Specifically, the All-Share Index ,which opened trading in 2018 at 38, 243.19, shed 6, 812.69 points or 17.81 per cent to close at 31, 430.50, eroding over 43 per cent growth posted in 2017.
Similarly, the market capitalisation, which opened at N13.609 trillion, dipped by N1.89 trillion to close on Dec. 31, 2018 at N11.720 trillion.
Commenting on the performance of the market, Prof. Uche Uwaleke, head of Banking and Finance Department, Nasarawa State University Keffi, described 2018 as a very disappointing year for the equities’ market.
“With positive returns of over 40 per cent in 2017, Nigeria was ranked the third best performing stock market in the world after Argentina and Turkey.
“On the other hand, between January and December 2018, the market has plunged into a bear territory having lost over 20 per cent from its peak in January when it posted 16 per cent return.
“The dismal performance of the market has been in spite of improved corporate results announced by listed companies as well as stronger macroeconomic performance,” Uwaleke said.
He noted that the economy expanded faster in 2018, in terms of GDP by 1.95 per cent, 1.5 per cent and 1.8 per cent in the first,second and third quarters respectively, when compared with 0.8 per cent averaged in 2017.