Foreign Investors Dump Nigerian Stock Exchange (NSE)

Foreign Investors Dump Nigerian Stock Exchange (NSE) for Nairobi, Johannesburg Exchanges By Eromosele Abiodun – The expectations that Nigerian equities market will rebound soon may be dashed as some of the foreign investors, who left the Nigerian Stock Exchange (NSE) are taking advantage of opportunities in Kenya and Johannesburg, South Africa.

Industry sources told THISDAY that the Nairobi Securities Exchange (NSE) has particularly benefited from the disillusionment of the foreign players with the Nigerian capital market, particularly the dedicated Africa funds, which have limited investment destinations.

Another factor according to analysts at FBN Capital was the Central Bank of Nigeria’s (CBN’s) exchange-rate policy and acute foreign exchange shortages.

Also, the Kenyan economy is growing by about five per cent annually while the Nigerian economy has since slowed to 2.9 per cent.

An analysis of the three Exchanges showed that the NSE is the worst performing of the three African indices intermittently tracked by investors.

The NSE All-Share Index (ASI), which recovered from a low of 21.6 per cent year-to-date (YTD) declined on 19 January to close the month at 16.5 per cent, dipped further to 9.7 per cent as of Monday.

Analysts believe the pick-up in the NSE ASI since the beginning of this month was driven by the rise in the crude oil price.

In the same vein, trading values have been pitiful this year on the NSE and averaged $11.6 million (2.2 billion) YTD, compared with $26.6 million (N5.2 billion) in the same period of 2015.

This, analysts stated, can be explained in good measure by the dramatic loss of buying interest from the offshore portfolio community in response to the slowdown in growth, the CBN’s exchange-rate policy and acute foreign exchange shortages.

Conversely, analysts also believe the Johannesburg Securities Exchange (JSE) performance of 1.7 per cent (YTD) has defied the sluggish economy, the mounting pressures surrounding the Zuma presidency and rising unemployment in the mining industry.

“The International Monetary Fund (IMF) World Economic Outlook in January projected growth of just 0.7 per cent this year, (its figure of 4.1 per cent for Nigeria would, we understand, now be no more than 3.0 per cent), “said FBN Capital.

The NSE, they stressed, would benefit above all from some sizeable new listings, and in sectors barely represented on the exchange.

“In time there should be some good news from the restructuring of the Nigerian National Petroleum Corporation (NNPC). We urge patience. Our expectation for the NSE for the year is a decline of 10.0 per cent,” they said.

The Director General, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo recently urged the federal government to help encourage multinational companies operating in the country to list on the floor of the NSE to give Nigerians opportunity to benefit from their investments. Read more (Credit: 

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