Culled—-Proshare
Thursday, June 30, 2016 8:41 AM / FBNQuest Research
The NSEASI reached a low this year of -21.6% ytd as early as 19 January on the fall of the oil price below US$30/b and the consequent rationing of fx by the CBN. There followed a modest pick-up on better-than-expected Q4 2015 results from the larger companies.
Subsequent turning points were the MPC communique of 24 May which revealed unanimous support for the liberalisation of exchange-rate policy and the launch of trading under the new market-driven regime on 20 June. The index stands up 4.1% ytd: our chart, however, is not adjusted for exchange-rate movements.
Turnover has predictably slumped to a ytd daily average of N2.4bn. The exchange’s latest report on portfolio participation in equity trading shows monthly turnover of N67bn for April, compared with N207bn for the year-earlier period. For foreign players, the report highlights a steeper decline (to N28bn from N104bn).
Anecdotal evidence suggests a switch out of Nigeria into Kenya earlier in the year, particularly by those dedicated Africa funds with limited investment alternatives.
The subsequent recovery of the NSE and decline in Nairobi cannot be explained by the movement in reverse. There has been some recent offshore buying of names such as DangCem and GT Bank but, we understand, from funds “blocked” due to delayed repatriation after earlier trades.
In our 2016 Outlook, published in late January, we forecast a decline in the index of -10.0% over the year. We have been surprised by the boldness of the liberalisation introduced by the CBN.
