By Udeme Ekwere

Tuesday, 15 Feb 2011

The market capitalisation of the listed equities on the Nigerian Stock Exchange has recorded a decline of N384bn within the last three weeks.

Following its recovery by 18.9 per cent last year, activities at the capital market continued on the rise, hitting a peak of N8.885tn on January 25, 2011.

It, however, began a steady decline after that, falling by 4.3 per cent or N384bn to close on Monday, at N8.501tn in a spate of 20 days.

Similarly, the NSE’s All-Share Index fell by 4.3 per cent or 1,198.98 basis points from 27,797.39 to 27,598.41 in the period under consideration. The NSE-30 Index declined by 60.82 basis points or five per cent to 1,160.28, down, from 1,221.10 recorded on January 25.

The NSE 30 Index is a price index that measures the returns on investment from the change in market value of the stocks in terms of capital appreciation and depreciation only. It includes the top 30 companies in terms of market capitalisation and liquidity. This is measured by adjusted market capitalisation.

Market analysts have traced the persistent decline in activities to some policy issues that have been rocking the NSE.

According to them, various pronouncements and activities of the market regulators have served to bring about some of the inconsistencies recorded in the market in the last three weeks.

The Chairman, Association of Stockbroking Houses of Nigeria, Mr. Rasheed Yusuf, said that the Nigerian capital market, like any other market, was volatile.

Speaking to our correspondent on Monday, he noted that every market experienced its own ups and downs from time to time, adding that a major cause of the decline was that information had not been well managed.

He said, “I think this should be taken into consideration before pronouncements are made in the market, as this could either increase activities or bring panic among investors.”

He noted that the drop in the market could also be as a result of the happenings in the money market. He added, “If the money market is attractive, investors would move there to make profit.”

Yusuf noted that there was nothing fundamentally wrong with the market, stressing that, before long, activities might pick up.

The Managing Director, Lambeth Trust and Investment Company Limited, Mr. David Adonri, noted that the issuance of bonds by the Debt Management Office to be sold this week might also divert funds from the capital market this week.

He said, “Activities were a bit slow in the market last week due to the CBN sale, which was over-subscribed, and the same trend may continue this week, following the issuance of the N66bn FGN Bonds to be sold by the DMO this week.”

Source: Punch