Foreign investors are currently dumping their shares on the Nigerian Stock Exchange, following reports of bomb attacks in some parts of the country, an investigation by our correspondent has revealed.
Sources close to the Exchange told our correspondent on Tuesday that the foreign investors, who began to return to the market after the April elections, started offloading their shares on Friday, a day after the bomb attack on the police headquarters in Abuja.
A managing director of one of the stockbroking firms, who preferred anonymity because of the sensitive nature of the subject, said, “There are a lot of reasons why the market has been shedding heavily in the last few weeks. But lately, we have discovered that one or two stockbroking firms, which mainly handle foreign clients, have been selling heavily. In fact, one of them confirmed that they had received orders from their foreign clients to sell due to the security challenges.
“We know this is as a result of the uncertainties in the polity arising from the security concerns that we have been faced with since after the general elections, the latest of which was the bombing of the police headquarters in Abuja.”
He said the investors were worried about the safety of their investments in the face of all the security challenges in the country, especially as a new government was just settling down to work.
“You know, the foreign investors are very cautious when it comes to investing their money, and even though they see a promising and thriving market in Nigeria, the issues that have to do with insecurity are enough to scare them away, just as the Middle-East crisis did a few months back. So, that is one of the reasons our market has been dropping heavily,” the source said.
The major market indicators fell below their safety levels on Tuesday. The NSE’s All-Share Index fell by 229.67 basis points or 0.9 per cent from 25,119.41 on Monday, to 24,889.74 points.
Similarly, the market capitalisation of the listed equities fell to N7.958tn, down from N8.031tn the previous day, representing a decline of 0.9 per cent or N73bn.
The Managing Director, Ideal Securities Limited, Mr. George Okafor, told our correspondent that there was a lot of tension in the system, which could scare foreign investors away.
He said, “Like I always say, this market is information-driven, and a little information can trigger a lot of reactions in the market. There is tension everywhere and the fact that Nigeria is fast becoming a terrorist nation is a very serious issue that can scare away these investors.
“It is true that foreign investors are selling heavily due to this, and I pray that the situation is addressed promptly to avoid a major disaster in our market.”
The capital market had recorded huge losses in the period preceding the general elections due to uncertainties as well as crises in the Middle East and some North African countries at the time.
The situation, however, improved after the elections, which observers said were fairly conducted.
The Chairman, Association of Stockbroking Houses of Nigeria, Mr. Rasheed Yussuf, had told our correspondent that the fairly conducted elections impacted positively on capital market activities.
He said, “It is a very positive development for our market and the country as a whole. You know, before now, foreign investors had been afraid of the market and were sceptical about investing in it because of the political instability arising from the recent crises in some African countries like Ivory Coast, Eygpt and the Middle East.
“However, the elections have put to rest some of those issues and have made the Nigerian capital market more attractive. It has gone to show that the country is a democratic country that can successfully carry out transition from one political dispensation to another and these are positive moves that are sure to work out in our favour.”
Sources close to the Exchange told our correspondent on Tuesday that the foreign investors, who began to return to the market after the April elections, started offloading their shares on Friday, a day after the bomb attack on the police headquarters in Abuja.
A managing director of one of the stockbroking firms, who preferred anonymity because of the sensitive nature of the subject, said, “There are a lot of reasons why the market has been shedding heavily in the last few weeks. But lately, we have discovered that one or two stockbroking firms, which mainly handle foreign clients, have been selling heavily. In fact, one of them confirmed that they had received orders from their foreign clients to sell due to the security challenges.
“We know this is as a result of the uncertainties in the polity arising from the security concerns that we have been faced with since after the general elections, the latest of which was the bombing of the police headquarters in Abuja.”
He said the investors were worried about the safety of their investments in the face of all the security challenges in the country, especially as a new government was just settling down to work.
“You know, the foreign investors are very cautious when it comes to investing their money, and even though they see a promising and thriving market in Nigeria, the issues that have to do with insecurity are enough to scare them away, just as the Middle-East crisis did a few months back. So, that is one of the reasons our market has been dropping heavily,” the source said.
The major market indicators fell below their safety levels on Tuesday. The NSE’s All-Share Index fell by 229.67 basis points or 0.9 per cent from 25,119.41 on Monday, to 24,889.74 points.
Similarly, the market capitalisation of the listed equities fell to N7.958tn, down from N8.031tn the previous day, representing a decline of 0.9 per cent or N73bn.
The Managing Director, Ideal Securities Limited, Mr. George Okafor, told our correspondent that there was a lot of tension in the system, which could scare foreign investors away.
He said, “Like I always say, this market is information-driven, and a little information can trigger a lot of reactions in the market. There is tension everywhere and the fact that Nigeria is fast becoming a terrorist nation is a very serious issue that can scare away these investors.
“It is true that foreign investors are selling heavily due to this, and I pray that the situation is addressed promptly to avoid a major disaster in our market.”
The capital market had recorded huge losses in the period preceding the general elections due to uncertainties as well as crises in the Middle East and some North African countries at the time.
The situation, however, improved after the elections, which observers said were fairly conducted.
The Chairman, Association of Stockbroking Houses of Nigeria, Mr. Rasheed Yussuf, had told our correspondent that the fairly conducted elections impacted positively on capital market activities.
He said, “It is a very positive development for our market and the country as a whole. You know, before now, foreign investors had been afraid of the market and were sceptical about investing in it because of the political instability arising from the recent crises in some African countries like Ivory Coast, Eygpt and the Middle East.
“However, the elections have put to rest some of those issues and have made the Nigerian capital market more attractive. It has gone to show that the country is a democratic country that can successfully carry out transition from one political dispensation to another and these are positive moves that are sure to work out in our favour.”
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