Onyema says present stock market rally is based on 2017’s outstanding performance

The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, said, on Tuesday, that the present equity rally was based on the enhanced performance posted in 2017.
He said this during the presentation of 2017 Market Recap and Outlook for 2018 at the exchange in Lagos.
He said that the more than 12 per cent growth posted by the market, so far, in 2018 was due to the fact that the nation’s market was the third best performing market in the world in 2017.
Onyema said that the news and achievement brought made more investors to embrace the nation’s bourse.
The NSE is the most performing market in the world at the moment with more than 12 per cent growth year-on-year.
He said that low prices of stocks, when compared to fundamentals, attributed to the price rally in the market.
“People realised that the market is still very cheap, when compared to companies fundamental,’’ Onyema said.
He added that the foreign exchange exporter window introduced by the Central Bank of Nigeria (CBN), in 2017, contributed to the market growth.
According to him, the window had boosted the confidence of foreign investors after months of tests, with many of them now comfortable to bring in bigger funds.
Onyema said that a lot of investors were still optimistic that fiscal policy would come in very soon, to drive the market for the second round of growth.
Speaking on the prognosis for 2018, Onyema said that the outlook for the Nigerian capital market was encouraging.
He said that political activities, ahead of 2019 elections and currency movements, would affect the market growth to some an extent.
“Indeed, to some extent, political activities and currency movements will have some effect on the market, but we expect that such impacts will be short-lived and the performance of the underlying business activities will ultimately determine market performance,’’ Onyema said.
On market performance in 2017, Onyema said that the NSE recovered from the macro-economic overhang of the commodity down-cycle to become the third best performing market in 2017 globally, with a 42 per cent return in the NSE All-Share Index.
Onyema said that the market capitalisation rose by 47 per cent in 2017 to N13.62 trillion against N9.26 trillion posted in 2016.
He attributed the performance in part to the apex bank’s monetary policies that resulted in increased liquidity in the foreign exchange market.
According to Onyema, the equity market activity skyrocketed from 2016 levels, as market turnover increased by 121 per cent to N1.27 trillion from N0.58 trillion.
“IPO activity in the year remained mute, but there were several other positive indicators – including the revival of supplementary listings and the return of new issuances.’’
Onyema said that the value of supplementary listings increased by 27 per cent, bringing the total value of equity issues in 2017 to N408 billion.
He said that the Exchange’s 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 foreign exchange stability.
“Yields across various tenors declined between 0.4 per cent and 1.5 per cent, and market turnover declined by 24 per cent in 2017, as investors sought higher returns in alternative product classes.
“Supplementary issuances by the Federal Government saw bond market capitalisation increase by 34 per cent year-on-year,”Onyema said.
He said that the Exchange Traded Fund market witnessed increased activity across key metrics in 2017, recording a 272 per cent year-on-year growth in trade volume.
Onyema added that it posted 33 per cent growth in turnover and a 40-percent, year-on-year increase in market capitalisation to close the year at N6.69 billion.

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