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Friday, February 21, 2020 / 06:00 AM / ByProshare Research/ Header Image Credit: EcoGraphics
NSE
The performance ofNigeria's major equity market, the Nigerian Stock Exchange (NSE), has been patchy,good at some periods and bad at others, the Exchange's performance has closelymirrored that of the growth of the country's GDP. When GDP growth has beenstrong, the market has done well, and when GDP growth reversals have takenplace (such as in 2016 and 2017), the NSE All Shares Index (ASI) has taken aknock (see Table ...below).
In 2010 the NSE ASI returned a market value of +18.93%; this suddenly slumped to a negativereturn of -16.31% in 2011 with markets uncertainof the outcome of the scheduled presidential election in that year which wassubsequently won by President Goodluck Jonathan against the incumbent PresidentMuhammadu Buhari as the main challenger. Between 2012 and 2013, the market wasamongst the best performing in the world, with a return of +35.45% in 2012 and +47.19%in 2013.
The onset of global tension and the slowing downof Asian economic growth in 2014 with international oil prices tumbling andshale oil production rising in the United Staes of America, oil prices fellfrom US$115 per barrel in July 2014 to under US$60 per barrel in January 2015dragging down the equity markets of various oil-producing economies. The NSE ASI fell by -16.14%in 2014 and dropped further by -17.36% in2015 and -6.17% in 2016 before recovering by +42.30% in 2017. The market went into a quickreverse in 2018, sliding by -17.81% and slumpedby an additional -14.60% in 2019. In other words, within the last decade, themarket fell five (5) times and rose four (4) times.
Table...NSE ASI Growth 2010-2019
| NSEASI: 10-Year Review | |||
| Year | Open | Close | % Chg |
| 2010 | 20,827.17 | 24,770.52 | 18.93% |
| 2011 | 24,770.52 | 20,730.63 | -16.31% |
| 2012 | 20,730.63 | 28,078.81 | 35.45% |
| 2013 | 28,078.81 | 41,329.19 | 47.19% |
| 2014 | 41,329.19 | 34,657.15 | -16.14% |
| 2015 | 34,657.15 | 28,642.25 | -17.36% |
| 2016 | 28,642.25 | 26,874.62 | -6.17% |
| 2017 | 26,874.62 | 38,243.19 | 42.30% |
| 2018 | 38,243.19 | 31,430.50 | -17.81% |
| 2019 | 31,430.50 | 26,842.07 | -14.60% |
| Source: NSE, Proshare Research | |||
FMDQ
The FMDQ's overall turnover has been better thanthe NSE movement based on available data (this may require revision if datawere available from 2010 to 2014), over the last half-decade market turnoverhas risen four (4) times and fallen once. The market turnover rose +32.12% in 2015 but fell by -17.29% in 2016. There was a quick recovery in 2017with the market climbing to +24.97% and afurther +28.75% in 2018. The market turnover closed the decade in 2019 with a growthof +6.43% (see Table...below).
Table...FMDQ Market Turnover2010-2019
| FMDQ Market Turnover (N'trn): 10-Year Review | |||
| Year | Open | Close | % Chg |
| 2010 | NA | NA | 0.00% |
| 2011 | NA | NA | 0.00% |
| 2012 | NA | NA | 0.00% |
| 2013 | NA | NA | 0.00% |
| 2014 | NA | 104.00 | 0.00% |
| 2015 | 104.00 | 137.40 | 32.12% |
| 2016 | 137.40 | 113.65 | -17.29% |
| 2017 | 113.65 | 142.03 | 24.97% |
| 2018 | 142.03 | 182.86 | 28.75% |
| 2019 | 182.86 | 194.62 | 6.43% |
| Source: FMDQ, Proshare Research | |||
| NB: 2019 Data Covers Jan - Oct | |||
Mutual Funds
The mutual funds market had a fairly impressivedecade between 2010 and 2019. In 2012 the sectors Net Asset Value (NAV) rose by+38.33% from N73.78bn in 2011 to N102.06bn in 2012. Between 2012 and 2013, NAVvalues climber higher by +70.99% from N102.06bn in 2012 to 174.50bn in 2013,before the bogey year of 2014 pulled NAV values down, -0.74%.
Mutual funds, however, quickly recovered in 2015with NAV growth rate ending the year at a growth of +49.94%or N259.72bn. In 2016 the market stumbled again, and NAV values fell by -15.39%; this was on the back of foreign portfolioinvestors (FPIs) pulling away from Nigeria's equity market and looking for lessuncertain havens for cash. Restoration of confidence in the economy in 2017 asthe country slowly pulled out of a recession saw NAVs of mutual funds grow by +90.39%. The strong growth in NAVs in 2017 wasrepeated more modestly in 2018, with NAVs growing by a further +48.41%. The decade ended in 2019, with the NAVsof the NSE's mutual funds rising by an additional +56.11%(see Table...below).
Table... NAVs of Mutual Funds 2010-2019
| Mutual Funds Total: 10-Year Review | |||
| Year | Open | Close | % Chg |
| 2010 | NA | NA | 0.00% |
| 2011 | NA | 73,780,479,725.68 | 0.00% |
| 2012 | 73,780,479,725.68 | 102,057,255,158.05 | 38.33% |
| 2013 | 102,057,255,158.05 | 174,502,658,237.92 | 70.99% |
| 2014 | 174,502,658,237.92 | 173,216,689,732.68 | -0.74% |
| 2015 | 173,216,689,732.68 | 259,718,239,123.74 | 49.94% |
| 2016 | 259,718,239,123.74 | 219,986,973,870.34 | -15.30% |
| 2017 | 219,986,973,870.34 | 418,831,111,829.83 | 90.39% |
| 2018 | 418,831,111,829.83 | 621,592,656,547.20 | 48.41% |
| 2019 | 621,592,656,547.20 | 970,345,146,731.90 | 56.11% |
| Source: SEC, Proshare Research | |||
The last decade ofNigeria's financial markets saw some ups and downs shaped mainly by externalfactors such as global recession, frosty trade relations between America andChina, and the slowing down of Asian country's growth rates. A further factorin determining the decade's outlook was the USA's joining the oil export marketwith shale oil producers became increasingly important factors in the pricediscovery process of oil markets.
The new decade whichstarted in 2020, will equally involve the resolution of international tradeconflicts and economic nationalism, while oil will become a less criticalenergy source going forward. The new decade will, in the first two years atleast, mimick developments in 2019 and lead to slow economic growth (well belowthe economic recovery and growth plan (ERGP) forecast of +7.00% in 2020), but slightly faster than the Q32019 GDP growth of +2.28%. Proshareresearch forecast suggests that Nigeria's GDP growth in 2020 would likelysettle between +2.30% and +2.50%.
Do feel free to share your opinions/observations and feedback with usvide [email protected] and/or [email protected]
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