Six months into President Muhammadu Buhari’s administration, the economy has posted further bad news as stocks on the Nigerian Stock Exchange, NSE, fell to a three-year-low on Monday, with the All Share Index, ASI, dropped 0.8% to 27,385.69, the lowest since December 2012.
The market for the past six months has suffered the effects of a lack of a formidable policy direction despite the recent appointments of Ministers, as experts have blamed the plunging stocks on the exit of investors from the Nigerian market, who have lost confidence due to government negligence.
After Buhari’s first 100 days in office, Post Nigeria reported that the NSE’s Chief Executive Officer, Oscar Onyema, had called on the President to consider as a matter of urgency the resuscitation of the market which has suffered uncertainties and crashes from May 29 to August 31.
An analyst at Vetiva Capital Management, Pabina Yinkere, said, “The government has not come up with a definitive policy for the economy,” adding that “the continued lack of clarity is affecting the stock market.”
Others decried that the policies of the Central Bank of Nigeria, CBN, had further compound woes to the economy directly and indirectly.
Bloomberg in its recent data analysis attributed the downturn in foreign investors’ interest in Nigeria to President Muhammadu Buhari’s “uncertain and haphazard” economy policies.
Investment Officer, David McIlroy, said, the recent interest rate cut by the CBN, would heap more pressure on the Naira.
“The surprise reduction in rates has probably worried international investors even more.
“Given the inflation rate is above the central bank’s target, there’s pressure on the currency and they need to attract foreign capital, you’d expect interest rates to be rising. We’ve increased our positions in Egypt and Kenya at the expense of Nigeria.
“Renaissance Capital, a leading Russian investment banking firm with a focus on emerging markets, also communicated to its clients that equity funds are more underweight in Nigeria than any other frontier and emerging market, except for Kuwait and Morocco,” McIlroy said.
Analyst further warn that if this trend continues in 2016, it will spell doom for the nation as prices of crude at the international market are nothing to write home about.
According to Reuters, there are about 20 million barrels of Nigeria’s December-loading crude still up for sale, with no buyer.
For January, very few of the 67 cargoes of Nigerian crude have found buyers while there are still 29 Angolan cargoes, with one trader estimating that just three spot cargoes had changed hands.
A trader said, “The market is very weak, sellers are very aggressive.”
Presently, the country is ravaged with fuel scarcity, inflation, cash crunch, and economic hardship.
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