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Nigerian Stock Exchange crashes

The Nigerian Stock Exchange (NSE) ranked the best performing in Africa in 2017, has crashed, ranking as the worst performing in Africa 2018 Year-to Date.
The situation has been attributed to the tensed political developments in Nigeria coupled with some negative macroeconomic statistics.
Ranked best performing in Africa in 2017, NSC was also ranked the third best in the world last year by ‘CNN Money’  after recording a whopping 48 per cent returns on investments during the year.
Vanguard reported that as at Tuesday, September 3, 2018, the NSE All Share Index, ASI, had fallen by -11.3 per cent YtD.
The weekly pan-African stock market monitor by United Capital Plc, a Lagos based investment house, which built the statistics indicated that BVRM (“Regional Securities Exchange) was the second worst performing stock market in Africa with a negative return of -11.1 per cent YtD.
BVRM covers Francophone West Africa’s weaker economies including Benin Republic, Burkina Faso, Guinea Bissau, Cote d’Ivoire, Mali, Niger, Senegal and Togo.
The analysts listed Morocco Stock Exchange as the third performing with -7.1 per cent negative return.
South Africa, competing for leadership position amongst African economies by size, also had its bourse, the Johannesburg Stock Exchange, JSE, going down, but was better of with a -1.3 per cent negative return.
On the flip side, the Tunis Stock Exchange, TSE, topped other major exchanges, rising by 33.4 per cent during the eight month period, followed by Zimbabwe Stock Exchange, ZSE, and Ghana Stock Exchange, GSE, which rose by 21.8 per cent and 7.9 per cent respectively.
Explaining the lacklustre performance of the NSE, Mr. Johnson Chukwu, Managing Director/CEO, Cowry Asset Management, a Lagos-based investment banking firm, said that the  major constrictive factor that led to weak performance of the Nigeria equities market is the present political situation, adding that none of the countries that outperformed the NSE is going through a national election fever.
“The earlier part of this year witnessed a lot rumbling in the ruling party, which scared foreign investors away from the market.
So, 2018 is completely different from 2017 because 2018 is almost an election year because it precedes a national election with a lot attention now focused on political activities, leading to heightened political risk, which investors are shying away from.
That is why also the equities market has not done well in 2018.

“So, it has to do with political risk in addition to some economic factors such as the normalisation of interest rate in the United States of America, increase in yield in the United Kingdom and even the normalisation of monetary policy by the European central bank and Japanese central bank,” he said.