By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) said on Wednesday that its projected $1 trillion market capitalisation target by 2016 is no longer realistic.
Oscar Onyema, chief executive officer (CEO) of the NSE said this at its yearly review 2014 market recap and outlook for 2015.
According to him, the target was across five (5) asset classes. “That target was $1 trillion by 2016 across five asset classes. We no longer believe that it would be possible to meet those targets given where we are today.
We believe that our new strategy up to 2019 has more realistic targets and those targets are really based on meeting three objectives. So, we are approaching it from a different perspective,” Onyema affirmed.
Onyema said the NSE’s market development strategy up to 2019 will help it achieve reasonable market growth. “Despite the downturn in 2015, we expect that as the year progresses, with a successful election, better outlook for oil and the naira, the stock market outlook will improve. Recent economic expansion in the country is expected to continue in the foreseeable future despite the challenges,” he added.
According to the CEO at NSE, in 2014, the NSE National Council (Board) approved a revised 2019 NSE Corporate Strategic Plan detailing the Exchange’s new growth strategy for the next five (5) years, leading to 2019.
“This revised strategy seeks to position the Exchange as the market for entrepreneurial growth. With key revisions to specific targets, the NSE began executing the 2019 strategy, focusing priorities on initiatives aimed at achieving the Exchange’s three (3) strategic objectives,” Onyema said.
He disclosed that the three (3) strategic objectives include increase in the number of new listings across five (5) asset classes, increase order flow in the five (5) asset classes and operating a fair and orderly market based on just and equitable principles.
Onyema also decried some concerns that have led to the dwindling fortune of the Nation’s stock exchange which led to massive sell-offs.
These concerns are that the foreign investors steadily withdrew from the Nigerian market, due to currency risk and the recovery of developed economies, and the effects of the US Federal Reserve tapering of its quantitative easing (QE) policy.
He further affirmed that several macroeconomic developments also contributed to the decline in market performance, which include fall in crude oil prices and related pressure on the Naira, the impact of Central Bank of Nigeria’s (CBN’s) monetary policy changes introduced at various points throughout the previous year.
Other concerns which had negatively affected the market are Nigeria’s declining foreign reserves, festering insurgency in the nation, uncertainty around the upcoming 2015 elections and weak corporate earnings.
“The air of uncertainty that hovered over the Nigerian capital market throughout 2014 caused investors to increasingly adopt a ‘flight to quality’ strategy,” the NSE CEO said.
