By Udeme Ekwere

ACTIVITIES on the Nigerian Stock Exchange have continued to drop because politicians have continued to sell off their portfolios to fund campaigns for the April elections.

The President, Chartered Institute of Stockbrokers, Mr. Mike Itegboje, said this in an interview with our correspondent in Lagos on Tuesday.

He said market activities might not pick up until the elections were over.

Investors had thought that the negative market trend had ended last week, when major indicators recorded a three-day appreciation after 10 straight days of losses.

However, figures released by the Exchange showed that the market again returned to its low-activity trend from Monday.

From a height of 27,797.39 basis points on January 25, 2011, the NSE’s All-Share Index had been dropping consistently, reaching 25,133.31 on Tuesday, thus representing a 9.6 per cent or 2,444.80-basis point decrease.

In the same period, the market capitalisation of the listed equities dropped by 9.6 per cent or N855bn from N8.885tn to N8.030tn.

The NSE-30 Index, which measures the performance of the top 30 stocks on the Exchange, also lost 11 per cent to stand at 1,088.08 points in the period under consideration.

Itegboje said, “The main issue that accounts for the losses we have witnessed in the market is that this is an election year, and many politicians are in need of money and they have been selling their shares in order to fund their campaigns.

“The fact is that when investors are selling heavily to make money, supply will be higher than the demand in the market, and that is what has affected the market. As soon as the elections are over, things should return to normal.”

He added that some investors still remained sceptical about investing in the market, as a result of uncertainties as regards the outcome of the elections.

He also noted, “Investors outside are also watching and waiting to see how the elections will go and what the impact will be on the economy. They may be afraid that if something bad happens, they may find it difficult to move their funds from the market.

“So, this makes them hold on to their funds, rather than investing in the market. So, all these are what have been affecting activities. It is a temporary issue that will straighten out after the elections.”

The Managing Director, Proshare Nigeria, Mr. Olufemi Awoyemi, had said this was “a generally bad time for the Nigerian economy.”

“For instance, the general elections are here and that is a serious problem for the market. Politicians at this time will be withdrawing funds from the market to fund their various campaign activities. Some of them, who would have ordinarily put funds into the market are not doing so, due to their various campaign activities,” he had said.

Source: Punch