Uncertainty In FG’s Policy Cripples Capital Market Growth – NSE Boss

The Chief Executive Officer of the Nigerian Stock Exchange, NSE, Mr.
Oscar Onyema, has called on the federal government to address the
uncertainties in its policies to stall further crash of the stock
market. The equities market extended weekly losses for the fourth
consecutive week as the local bourse closed in the negative at the end
of trading session on Thursday, August 27, 2015.

Nigerian Stock Exchange
Consequently, the All Share Index (ASI) declined by 1,656.58 basis
points or 5.5 per cent to close at 28, 221.75 points on Thursday from
29,878.33 points on Friday, August 21, 2015. Similarly, market
capitalization slumped by N542 billion or 5.3 per cent during the same
period, closing at N9.699 trillion from N10.241 trillion on Friday,
August 21, 2015.

On Monday alone, the twin indicators, the ASI and market
capitalisation, crashed the most, dropping by 2.2 per cent, an action
the NSE termed 'an over-reaction by investors'.

According to Onyema, who spoke in a chat with newsmen in Lagos,
investors loath uncertainty and would begin to react positively if the
gray areas are removed.

"Concerning the current challenges we are facing, I have to say that
our market is reflective of the economy, and as you know, the economy
towards the end of last year faced significant shots from crude oil
prices and that has impacted the foreign exchange rate, and created
uncertainties in the market place.


"As you know, investors do not like uncertainties and as we begin to
remove the uncertainties around exchange rate, around economic
policies, you will see investors be able to appropriately react to the
removal of these uncertainties. That is the feedback that we are
getting from investors" Onyema declared.

Speaking on reverberating effect of the crumbling economy in China on
the global markets, Onyema said " As you know, we are living in a
hyper-connected world; a world where shocks in one region end up
manifesting themselves in another region. We've seen a slight slowdown
in China and two currency devaluation that have sent some shocks.

"When you compare them to the fact that the U.S is beginning to
consider whether they should start increasing interest rate, and you
also have the situation in Europe and Greece, which is really a
European story. So if you have all of that, and you are looking from a
global perspective where we are looking to have global growth of 3.5
percent, and we have the largest second economy in the world slowing
down, which is a major source of that growth that we have seen across
the globe. Sure it is going to affect economies that are highly
connected to such economy."

Speaking in the vein, David Adonri, Managing Director, Highcap
Securities Limited, said that absence of clear policy direction by the
present administration is contributing in no small measure in
depressing equities prices. He affirmed that the crumbling share
prices in global markets would not have had much impact on the local
bourse if "we have clear policy direction and if our economy us
self-regenerative."
-Vanguard