Business
Nigeria: Capital market recovers witnesses gains of 34% in 2012
Traders on the floor of the Nigerian Stock exchange. PHOTO/File
The Nigerian capital market has shown significant resurgence from the depth it fell in 2008 and 2009.
The most recent numbers indicate that the capital market saw gains of up to 34 percent in 2012. The All-Share Index and market capitalization ended the year at 28,087.80 basis and N8.974 trillion (US$ 57 billion) respectively. These represented a 35.44 percent growth in 2012 alone and the Nigerian Stock Exchange (NSE) share index attained its highest rate in the last 46 months.
These new numbers are indicative of the confidence in the market by both Nigerian and foreign investors. The growth in the market is more-broad based unlike in the past when it was overwhelmingly dominated by the banking sub-sector and share prices are now driven more by market fundamentals, rather than behind the scene manipulations.
The capital market in Nigeria incurred significant losses – in 2008 (45.7 percent) and 2009 (33.7 percent) and in turn impacted negatively on the Nigerian economy and on investor confidence.
The current resurgence in the stock market can be attributed to a number of factors and proactive actions by the regulatory agencies. The first is the impact of major reforms embarked upon by the Security and Exchange Commission (SEC), the Central Bank of Nigeria, the Asset Management Corporation of Nigeria (AMCON) and the implementation of the reports of panels set up by the Federal Government. While the near collapse of the market in 2008 can be partly attributed to the global economic crises, it was also obvious that the regulatory and institutional structure of the Nigerian capital market were quite weak. These allowed for insider-trading, share price manipulations and various forms of market infractions.
The situation in 2008 was also amplified due to the fact that the oversight functions of both the Central Bank, and the SEC were extremely weak.
