Nigeria’s stock market continues it bearish trend, reversing the gains recorded at the beginning of this year (January 2021).
The Nigerian Stock Exchange (NSE) posted a year-to-date (YTD) decline of 0.2 percent.
The NSE, which had gained N8 trillion in 2020 and N1.124 trillion in the month of January of 2021, recorded a total decline of N1.161 trillion within the last three weeks.
The market capitalisation dipped from N22.187 trillion recorded at the end of January to N21.026 trillion as at last Friday.
Also, the NSE All-Share Index (ASI) fell from 42,412.66 to 40,186,70.
The bearish trend can be attributed to the widespread profit-taking activities which started in the past three weeks.
Most domestic investors have been trading cautiously given the yield elevation in the fixed income market in the near term, while foreign investors are yet to return due to foreign exchange (FX) challenges.
A founding partner at Cardinalstone Partners Limited, Mohammed Garuba, last week said that lack of liquidity in the FX market had prevented foreign investors from the Nigerian market.
He explained that the long FX scarcity was scaring investors away from the market, adding that even while foreign investors have started returning to Ghana and others, they were yet to return to Nigeria.
“In 2016 we had a problem like this when FX inflow dropped materially. But we started seeing some liquidity when the Investors & Exporters (I & E). In the past we have always seen financial crisis but never exceeded six months. For the first time, we started seeing this crisis March last year, when CBN stop selling FX and has not sold FX since then,” Garuba had said.