By OLUSHOLA BELLO And KAYODE TOKEDE, Lagos
Nigeria’s stock market has been named to be amongst the five top performers in 2017, topping equities markets of most major European, Middle Eastern and Asian countries, a CNN report has revealed.
The report which examined the performances of global equities’ markets, listed the United States stock market to have average 25 per cent, Nigeria 43 per cent, Turkey 43 per cent, Argentina 73 per cent and Hong Kong 35 per cent as the major outperformers.
Analysts have said the ingenuity of the Central Bank of Nigeria (CBN) in the management of the foreign exchange market helped notch Nigeria’s stock market to be amongst the five top best performing exchange for 2017.
They said the NSE was able to achieve this after posting losses for three consecutive years, 2014 to 2016, as a result of the introduction of the Importers and Exporters’ Window (I&EW) in mid-April which helped stabilise volatility and liquidity in the forex market, pulling back foreign investors who have been waiting on the sideline.
According to them, this also improved macro fundamentals as Nigeria exited recession, boosted external reserves, brokered peace with militants amid oil price rally and improvement in ease of doing business and strong corporate earnings results. The value of public companies on global stock markets grew by $12.4 trillion in 2017, according to S&P Dow Jones Indices, which included dividends in its calculation as a number of markets even outperformed the U.S.
The report also listed Qatar as the biggest loser, down by 19 per cent this year despite the big recovery of crude price. The small nation’s economy has been under pressure following its spat with Saudi Arabia, Bahrain and the UAE.
The report said the Nigerian stock market has so far this year recorded a 43 per cent gain after the central bank made it easier to swap foreign currencies through the special window called the ‘Investors’ and Exporters’ FX Window’ created on April which also helped the country ease out of a short but painful recession.
It has been noted that the Nigerian All-Share index is still miles below record highs set in early 2008, but a 43 per cent rally in 2017 has helped to close the gap. The index suffered mightily in 2015 and 2016 as low oil prices, militant attacks, currency troubles, elections and Ebola hit investor sentiment.
Founder and CEO of Silk Invest, Zin Bekkali explained that oil prices have moved higher, the central bank has made it easier to swap currencies and the economy has snapped out of recession, noting that “If you look at where we stand today, the [Nigerian] market is still one of the cheapest markets on the planet.”
Analysts are optimistic that stocks could keep rising in 2018 with continuous strengthen of its foreign exchange and on improved macro-economic indices. Yet the country’s benchmark index rallied by 43 per cent this year as the government implemented temporary tax cuts and a loan guarantee programme that encouraged banks to lend to small businesses. Gross Domestic Product (GDP) growth soared, reaching 11.1per cent in the third quarter.
The stock market performance was also helped by the falling Turkish lira, said Neil Shearing, chief emerging markets economist at Capital Economics. Now experts are warning that the good times can’t last forever. “From here on we think the economy is getting close to overheating,” said Daniel Salter, global head of equities at Renaissance Capital.
The report stated that the Hang Seng charged ahead by nearly 35 per cent, but China’s major mainland indexes in Shanghai and Shenzhen floundered. It’s all about Tencent (TCEHY), said Dickie Wong, the head of research at Kingston Financial Group. Shares in the Hong Kong-listed tech giant more than doubled over the past year and the company’s valuation briefly eclipsed that of Facebook (FB).
WeChat, the company’s popular mobile messenger, has close to 1 billion users, and investors have cheered forays into mobile gaming and video streaming. Meanwhile, the Shanghai and Shenzhen markets have languished after state media convinced local investors to be cautious, said Wong.