The Nigerian Stock Exchange (NSE) Wednesday said foreign investors sold a total of N513.85 billion ($2.58 billion) stocks with a net value last year.
The data from the NSE put the value of transactions by foreign investors at N1.025 trillion last year, compared with N1.538 trillion at the end of 2014. The latest data reflects the decline in the local market last year, when stocks fell by 17.36 per cent as oil prices plummeted and the naira weakened sharply.
Most of the selling was by foreign investors, who account for 53.79 per cent of activity in the market. The Nigeria’s benchmark gauge has dropped 19 per cent this year to near the lowest levels since July 2012. That’s the biggest decline among 93 primary indexes after Saudi Arabia’s Tadawul All Share Index and making equities in the continent’s largest oil producer the cheapest in sub-Saharan Africa. The drop in 2016 shows how wary foreign investors have become about putting money into a country they say is on the cusp of devaluing the naira because of lower crude prices, which would immediately wipe out gains converted back into foreign currency.
The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, while speaking at the 2015 market recap and outlook for 2016, said uncertainty and volatility dominates forecast for the New Year and beyond, as Nigeria struggles with commodity price shocks and the resultant impact on the Naira.
He said the NSE will focus on executing its strategy in order to continue to provide a credible platform for financing the economy.
“Accordingly, we anticipate 2016 to be a challenging year for the capital market and the domestic economy,”
According to him, the capital market has an opportunity to effectively finance the FGN’s proposed budget deficit for 2016 and the implementation of its medium term expenditure framework (MTEF). With greater clarity on policy direction, “we anticipate the return of investors who had remained on the sidelines throughout 2015.
Onyema said “we intend to continue our collaborative efforts with the new administration and other private sector players to create a framework for financing the Nation’s infrastructure and capital requirements. Additionally, we plan to work with the FGN to ensure that the appropriate messaging is conveyed to the investor community”.
The NSE boss explained that the current state of the market creates both challenges and opportunities for investors. We believe that taking a portfolio approach to investing provides the best risk adjusted alternative for participating in the capital market. “As such, we want to ensure that the NSE provides a repertoire of products that will allow investors to create well diversified portfolios of uncorrelated asset classes.