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Investors lose N10trillion to Dollar-Naira crisis

According to new comparative trading and valuation data provided by the Nigerian Stock Exchange (NSE), investors in the Nigerian stock market lost about N10 trillion in 2016 when adjustments were made for foreign exchange. The report showed that contrary to Naira-based valuation that showed that the Nigerian equities lost N604 billion or 6.17 per cent in 2016, forex-adjusted simple nominal return for equities was -38.6 per cent, equivalent to a net capital loss of N5.83 trillion at current exchange rate. The 12-month report also highlighted considerable slowdown in activities at the Nigerian capital market, in both Naira and Dollar terms. The primary market was almost inactive, underlining the challenge of capital raising faced by quoted companies as investors’ apathy gripped the market.

The Chief executive officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, revealed to stakeholders that the forex will remain a decisive issue for the performance of the Nigerian stock market in 2017 that:
“We expect investors to continue to keep a close eye on the divergence between the interbank forex rate and other exchange rates in the country. Accordingly, a convergence of forex rates in the country and the performance of listed corporates will determine the level of market activity in the short term." 

Onyema further said that putting the current economic realities into consideration, the NSE would take an adaptive approach to strategy execution in 2017. Also, he said that the NSE would focus on achieving its goal of becoming a more agile and demutualised exchange and would fast track efforts towards developing innovative products such as exchange traded derivatives to provide investors with tools to better weather economic realities in 2017.

He added that in order to drive liquidity, the Exchange will enhance its cross-border integration efforts through African Securities Exchange Association’s (ASEA) African Exchange Linkage Project (AELP) model and the West African Capital Market Integration (WACMI) programme.