NSE RANKED THIRD WORST PERFORMING STOCK MARKET IN THE WORLD

The Nigerian Stock Exchange (NSE) has been ranked the third worst performing stock market globally during the 2014 financial year. According to a report published yesterday in the online edition of Daily Telegraph of London, the Nigerian bourse recorded 33 per cent loss to earn third position among the 10 worst exchanges in the world.

The ranking also saw Moscow stock exchange recording 54 per cent loss to top the list followed by Borsa de Valores de Colombia stock exchange with a loss of 34 per cent to emerge second among other exchanges.
Others are Athens stock exchange, Greece, (31 per cent, fourth position), Wiener Borse stock Exchange, Austria (22 per cent, fifth), Budapest stock exchange, Hungary (21 per cent, sixth), Cyprus stock exchange, Cyprus (20 per cent, seventh), Bovespa stock exchange, Brazil (18 per cent, eighth), Bolsa Mexicana de Valores SAB de CV stock exchange, Mexico (12 per cent, ninth) and Bursa Malaysia stock exchange, Malaysia (10 per cent, tenth position). The Nigerian stock market had during the year reversed the gains of 41 per cent it made in 2013 to become one of the worst performing equity markets in Africa.
Investors in the market lost about N3.36 trillion while engaging in business between January and December this year, in what was attributed to the ups and downs of the market. The low sentiment in the market were worsened following upset in the financial market arising from drop in oil prices, insecurities, build-up to 2015 elections, Ebola crisis, recapitalisation fever, among others.
Financial analysts believe some of these factors sent a shock wave to both local and foreign investors and created uncertainty in the investment environment, which led to retreat on the part of the bargain hunters. Even earnings being posted by some quoted companies with promises of dividend pay-out could not rescue the stock market from limbo as sell pressure continued unabated.
According to President of Lagos State Chamber of Commerce and Industry, Alhaji Remi Bello, the downturn rattling the market is driven by sharp commodities price declineoil price, strong flight to safety capital reversal on the back of oil price decline and tighter monetary policy environment and weaker currency outlook which portend further depression for the market. Remi said there were signs of continued decline in volume and value of transactions into the early part of 2015. The Group Chief Executive Officer, UBA Capital Plc, Oluwatoyin Sanni, while reacting to the state of the local bourse said some international and local investors had withdrawn their investments in anticipation of the outcome of the elections.
Sanni added that the drop in oil price and perceived policy inadequacies also affected the international investors’ confidence while relatively low daily traded values and low turnover velocity were still hindrances to large investors. She added that the Nigerian economy was greatly exposed to geopolitical, geo- economic and currency risk, which is forcing foreigners to withdraw from investing.
She also identified the insecurity in the country as another challenge to the Nigerian market recovery. Sanni said the low financial literacy and low financial inclusion which also caused apathy to retail investors were also hindrances to the growth of the capital market, adding that lack of diversification also affected the growth of the market. Meanwhile, the Securities and Exchange Commission (SEC) has succumbed to brokers’ pressure and extended the deadline for minimum requirement for all capital market operators to September 30, 2015.
A report yesterday by the News Agency of Nigeria (NAN) said the extension was contained in a statement pasted at the commission’s web site. The commission has been battling with the Chartered Institute of Stockbrokers and the Association of Stockbrokers Houses of Nigeria (ASHON) over the extension. SEC stated that the approval for the extension of the deadline was given on December 22 at the commission’s board meeting following a review of the status report on the level of compliance by capital market operators. “The board expressed satisfaction with the efforts made by all operators, particularly those who have complied with the new requirements.
“The board, however, took cognisance of the effect of the global economic situation and approved an extension of the deadline for compliance with the new minimum capital requirements by nine months, to 30th September 2015, ” the statement stated. The commission also commended “the commitment of all stakeholders to building a world class capital market that enables Nigeria to realise its aspiration of a prosperous and peaceful nation”. The extension came on the heels of the plea by some capital market operators due to the ongoing uncertainties in the country that hampered market growth and development. SEC had on December 19, 2013, issued a new requirement for capital market operators with December 31 as deadline for operators to recapitalise. The apex capital market regulator increased minimum capital base for broker/dealer by 329 per cent from N70 million to N300 million.
A brokerage firm, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million. Issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. A registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. The minimum capital base for corporate investment adviser remained unchanged at N5 million; individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.
Also, dealing members of the exchange are contending with minimum operating standards recently introduced for all the three classes of dealing members, including broker dealers, brokers and dealers. The new standards address the five broad areas of manpower and equipment; organisational structure and governance; effective processes; global competitiveness and technology