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Following the rally at the Nigerian Stock Exchange (NSE), since the beginning of this year, which has resulted in bounce of the bourse, for the first time in its history, hitting N16 trillion capitalisation mark, the Chief Executive Officer, NSE, Oscar Onyema, has attributed the bull-run to improved forex window and investors’ confidence. The market year-to-date has recorded over 12 per cent gain.
Speaking at the NSE 2017 Market Recap/2018 Market Outlook, Onyema argued that the rating of the exchange as the third best performing market in the world has continued to attract huge investment into the nation’s bourse, adding that most investors are now taking positions because the market is cheap.
He explained that with the improvements in the Investors’ and Exporters’ window (I&E), confidence in the market is gradually being restored even as investors remain optimistic about fiscal policies, which will kick in to drive the second round of growth with the release of capital growth to drive infrastructure spending.
“The I&E window introduced by the Central Bank of Nigeria (CBN) in 2017 contributed to market growth we are seeing in terms of equity capitalisation in 2018. Even with this N15 trillion that we have, we just passed half of that in dollar terms because of the devaluation we have taken.
So people realised that the market is still cheap and they wanted to take positions given the fact that we have already taken a devaluation.
“I think that confidence is improving as people believe that fiscal policy will kick in at some point to drive the second round of growth with the release of capital growth to drive infrastructure spending.
Obviously, there are downside risks, especially as we go into the political cycle and we think that at the end of the day, performance of companies will be what will drive the market capitalisation,” he said.
Onyema, however, expressed dissatisfaction with the participation of market makers in the capital market, adding that the exchange is looking at restructuring the market and making rules around the market in 2018.
“There are still market makers in the market but we are not satisfied with their participation rate and how they catalyze growth in the market especially when we really needed them to participate in the commodity down cycle and so we have taken a critical look at it and we have engaged with the market makers and other market participants and in 2018 we are going to be seeing a very significant change in the structure of market making and the rules around market making”, he said.
