WILL 2018 BE BETTER FOR THE NIGERIAN STOCK EXCHANGE?

Already January so far has witnessed continued growth in market trading activities and particularly, in All share index which give the impression that 2017 superlative ending for the Nigerian stock exchange will not be an exceptional one.

But then, sometimes, trends in emerging markets can be deceptive primarily because dominant equities have a way of distorting indices and sporadic offload is more the norm, than the exception.

This is all because quoted companies are yet very few and speculators are even fewer since there is limited spectrum for institutional investors to compose and review their portfolio and since most retail investors buy to hold against the future.

Looking at the prospects of the market last Tuesday, the CEO Mr Oscar Onyema hinged his optimism mainly on projections by the IMF that the Nigerian economy will grow, not decline, by 1.9% in 2018; on the fact that stronger global economy will have its impact on the Nigerian one; on the potential for still higher global crude oil prices; stability in the foreign exchange market and relative fiscal stability.

But when asked, as market CEO, do you sleep better now? He replied straight from the heart: Not necessarily because he knows that ups and downs are part of the market realities. So true, no stock market goes on being bullish for ever or even for too long a time.

Back glance confirms many things though for the Nigerian market. One, that year 2017 was phenomenal, almost a runaway year with the All share index closing 42.3% up at 38,243.19 compared to 2016's 26,874.62/

Two, that like in the past this leap in ASI occurred as investors became more confident on prospects of the banking sector resulting in pace setting 73.32% growth in the banking index.

Three, that the three equities on the market's premium board, particularly top weighted Dangote Cement, played good part in the ASI upswing leading to 51.23% growth in its index.

Four, that weak sectors of the market actually would have pulled surprises from magical hats if they had done any better. The small and medium scale index shrunk by 8.6%; oil and gas with its troubled petroleum products distribution could only manage 5.76% index growth and still recovering industrial sector ended with only 10.36% increase in its index.

Five, that the Nigerian stock market is still as much dependent on foreign exchange fortunes as paced by crude oil prices as the Nigerian economy is.

In other words, unless the Exchange finds ways to stimulate and defend retail investment; unless the present crude oil prices are unlinked to the winter blizzard; and unless the Buhari regime retreats from its perfidious path of conscious nepotism which tempts sectional nationalists to reach for their tents; enjoy the current boom in the market while it lasts.

This is hoping too that the downswing will not as dramatic as it was in 2008 but, hey who is the shaping out any guarantees?


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