Nigerian Stock Exchange. Any hope in sight?
June 11th, 2008 Ogbuotobo Chuks || chuks@stockmarketnigeria.com
The year 2008 started with so much fun, excitement and expectation as investors anticipated a bumper year of harvest. The first two months of the year somehow reflected this as prices of stocks moved in the northward direction, thereby giving investors some good returns on their investment. But this was not to continue for long as most had expected it.
An estimated N680 billion has been lost between March 2008 till date as the market capitalisation on the exchange clearly reflects. This most people believe is related to the directive by the CBN that margin funding be stopped by banks in the country. Funds that would have found its way into the market were thereby stopped and as such, prices started to drop as they could no longer be sustained based on either speculative or fundamental grounds. It would not be out of place to say that investors during the period in question lost some confidence in the market. Companies in the last 3 months have been releasing impressive results which on a normal day were meant to push up prices but this still had little or no effect on price movement.
Things are however looking bright again as recent developments clearly suggest. Recently, there has been some news that the CBN and other relevant bodies are reviewing the issue of margin trading and even share repurchase/buy back as a viable tool in making the Nigerian capital market robust. Also troubled about the free fall of share prices in the market, a directive was given by the exchange commission such that in the last 3 days of trading, there has been no price loss in the market.
The big question therefore is if the market would bounce back again to what it once used to be if the margin funding is reintroduced and the share buyback is authorised. Do you as an investor still believe in the Nigerian market and its ability to create wealth for all classes of people?
Please send your views to Chuks(at)stockmarketnigeria.com and lets know how you feel.
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