Nigeria’s stock market has witnessed an impressive N2.2trillion gain this year but risks to the rally could appear as the nation nears the 2019 elections.
“The downside risks to current market trend relates to election year,” Oscar Onyema, Chief Executive Officer (CEO), Nigerian Stock Exchange (NSE) said in his response to questions at the 2017 Market Recap and Outlook for 2018, yesterday in Lagos.
Just two weeks into this year, the value of listed Nigerian equities, which had opened at N13.61 trillion, has increased to N15.78 trillion as speculators continued their bets on positive outlook for GDP growth and corporate earnings.
“Indeed, to some extent, political activities and currency movements will have some effect on the market, but we expect that such impact will be short lived and the performance of the underlying business activities will ultimately determine market performance,” he noted.
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On the back of an improving economic environment, expected better corporate earnings are stoking investor interest in 2018, which happens to be a pre-election year.
But research analysts at Lagos-based United Capital Plc stated in a recent investment note that they see scope for further uptrend in 2018 as a stable outlook in the oil market, expansion in the local economy, enhanced corporate earnings and less aggressive monetary policy vis-a-vis lower yield environment, drive demand for equities higher.
The analysts however warned, “uncertainties associated with a pre-election year may constrain market momentum.”
Onyema at the event which had in attendance the stockbroking community, analysts, media and other stakeholders, x-rayed the performance of the market in 2018 and also what to expect in 2018.
Reviewing market performance in 2017, he disclosed that “The equity market activity skyrocketed from 2016 levels, as market turnover increased by 121 percent to N1.27 trillion from N580 billion. However, activities in the Initial Public Offering (IPO) market remained mute. But “there were several other positive indicators including the revival of supplementary listings and the return of new issuances. The value of supplementary listings increased by 27 percent, bringing the total value of equity issues in 2017 to N408 billion,” Onyema said.
He noted that the “NSE recovered from the macroeconomic overhang of the commodity down cycle to become the third best performing market in 2017 globally, with a 42 percent return in the NSE ASI index;” a performance the CEO attributed in part to Central Bank’s monetary policies that resulted in increased liquidity in the foreign exchange market.
While the equities market boomed, the NSE fixed income market recorded mixed performance.
“New bond issuances increased over the previous year, while bond yields gradually moderated from 2016 levels amidst easing inflation and greater FX stability” Onyema said.
“Yields across various tenors declined between 0.4percent and 1.5percent, and market turnover declined by 24percent in 2017, as investors sought higher returns in alternative product classes.”
“However, supplementary issuances by the Federal Government saw bond market capitalization increase by 34 percent year-on-year.”
“The NSE’s Exchange Traded Fund (ETF) market witnessed increased activity across key metrics in 2017, recording a 272percent year-on-year (yoy) growth in trade volumes, 33percent growth in turnover and a 40percent year-on-year increase in market capitalization to close the year at N6.69 billion.”
“In 2017, we amplified our efforts to establish West Africa’s first derivatives market and achieved a number of key milestones during the year. These include the: completion of draft rules; development of product specifications; and market-wide trainings on derivatives and Clearing Counterparty (CCP) transactions. We also worked to create and enhance legal and regulatory frameworks which support derivative instruments, and have made significant progress towards securing approvals to operationalize these frameworks,” Onyema said.

In 2018, NSE will launch Exchange Traded Derivative (ETD) instruments and continue to engage with the government on privatization and listing of state owned enterprises in collaboration with the private sector. “We also plan to maintain our role as an advocate for the adoption and implementation of market friendly policies,” Onyema said.
Iheanyi Nwachukwu
