Foreign investors exit NSE over 2018 budget delay

The market capitalisation of the Nigerian Stock Exchange (NSE) lost N416 billion in five trading days due to the exit of foreign investors following delay in 2018 budget passage.

Market statistics obtained by NAN showed that the market capitalisation which opened trading on May 21 at N14.660 trillion shed N416 billion or 2.84 percent to close trading on May 25 at N14.244 trillion.

Similarly, the All-Share Index within the period dipped 1,148.83 or 2.84 percent to close trading on 39,323.62 compared with 40,472.45 it opened for the week.

Commenting on the persistent market lull, Sheriffdeen Tella, professor of economics, Olabisi Onabanjo University Ago-Iwoye, Ogun, attributed the development to uncertainties in the economy which affected foreign investors confidence.

Tella said the negative trend in the stock market in the last two weeks arose from the lack of money in the economy.

He said investors were taking profits to get cash for spending which led to selling pressure.

Tella said that delay in the passage of the budget affected foreign investors’ confidence in the nation’s economy.

He explained that the delay affected government spending, noting that our economy was public-sector driven.

“So, when government starts spending on infrastructure, communication, and other sectors that will impact on production, foreign investments in both direct and portfolio will start returning,” Tella said.

According to him, things will change as soon as the budget is fully approved for implementation and confidence returns to the economy.

The economist said the fluctuation would likely continue in the next four to five weeks.

Ambrose Omordion, the chief operating officer, InvestData Ltd, said foreign portfolio investors that positioned the market in mid-2017 were exiting their positions ahead of the upcoming general election.

Omordion said they were running for safety as the political risk surrounding the coming 2019 elections were already playing out.

He called on investors to invest for long-term or go for stocks with good fundamentals to minimise loss

Sola Oni, stockbroker and chief executive officer, Sofunix Investment and Communications, said Nigeria still remained a good investment destination for any investor regardless of any challenge.

Oni said investors must appreciate the fact that the stock market moves in a circle all over the world.

He said investors were at liberty to realise profit anytime the market was upswing, adding that, profit taking leads to bearish trend.