Nigeria Ends 2019 as Second Worst Performing Stock Exchange in Africa

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Introduction

A stock exchange is an organized and regulated market where financial instruments such as stocks and bonds, are bought and sold. The Index therefore measures and gives an indication of the perception of the people towards the financial market of a country. If the index is negative, it indicates that investors have a negative sentiments towards buying or selling financial instruments in that country- Here, the BEARS are said to dominate. If it is positive, then it indicates high optimism on the part of the investors- Here, the BULLS are said to dominate the market. The level of pessimism or optimism is therefore shown by the percentage figure in which the overall index level of a country indicates. For example, the NSE-ASI (Nigerian Stock Exchange-All Share Index) is the overall index that measures how well the Nigerian Stock Exchange is performing.

Based on the above, this research work tends to give brief analysis of the performance of the major stock exchange in Africa based on their index levels. It also gave a special preference to Nigeria by focusing on the stock performance of its stock exchange during the year under review.

Review of 2019 Performance of the Major Stock Exchange in Africa

Of the 16 major stock exchange reviewed, 8 yielded positive returns while the other half yielded negative returns in full year 2019. The Zimbabwe Stock Exchange returned 57.32% in 2019 and emerged the best performing stock exchange in Africa while the Nairobi Stock Exchange merged second best performing with full year 2019 returns of 18.5%. Followed is the Uganda Stock Exchange which yielded 9.17% returns and Johannesburg Stock Exchange which gave a returns of 8.24%. The Morocco, Egypt, Malawi and Tanzania Stock Exchange came in next in the list of stock exchange that gave positive returns in full year 2019 at 7.11%, 7.10%, 4.38% and 0.87% respectively.

Based on the data obtained from African Markets and various stock exchange

The Nigerian stock exchange in 2019 yielded a negative return of 14.60%. This means that if you invest in all the stocks listed on the Nigerian Stock Exchange (NSE), you will lose 14.6% of your money. And this shows that although you will gain from some of the shares that yielded positive returns. However, the loss on the shares that yielded negative returns will outweigh the positive returns and as such, makes you lose 14.6% of your money in 2019 investing on shares of companies listed on the NSE.

After the Lusaka Stock Exchange which gave a negative returns of 18.75%, the Nigerian Stock Exchange came in next as the second worst performing stock exchange, followed by the Ghana Stock Exchange with a negative return of 12.25% in full year 2019. With share index level of 2,004.97, the Stock Exchange of Mauritius returned 0.97% in full year 2019. The Tunisia Stock Exchange also yielded negative returns of 2.6%. The Rwanda, Botswana and BRVM stock Exchange yielded 4.18%, 4.55% and 7.55% respectively in full year 2019.

Nigerian Stock Performance (2019) in Focus

Based on the data obtained from the NSE, the NSE had an index level of 30,619.53bps at the end of the first month of 2019 and this grew by 4.45% to 31,981.18bps at the end of February 2019. In March 2019, the index level dipped by -1.89% to 31,376.65bps and this comes after the country’s general election. In April 2019, the NSE index level went below 30,000bps for the first time of the year as it went south by -5.42% (when compared to its performance in March) to 29,675.89bps. At the end of May 2019, the index level was 29,657.70bps, representing -0.001% decline when compared to the previous months and by June 2019, it grew by 1.22% to 30,019.71bps.

In the second half of 2019, the All Share Index (ASI) began with 5% decline to 28,517.22bps as at the end of July 2019 and further declined to 27,388.70bps at the end of August. At the end of October 2019, the ASI was 26,562.90bps which shows it declined by 3% when compared with the index level of October 2019. By November, the ASI was 26,689.41bps and was 26,603.39bps as at December 2019.

The total value of all the companies listed on the Nigerian Stock Exchange (NSE) as at 31st December 2019 was N12.96 trillion according to the data obtained from the Nigerian Stock Exchange as Dangote Cement remains the most capitalized company on the NSE at N2.42 trillion representing 19% of the total market value of all shares listed on the NSE.

Having previously shed -17.8% in 2018, the Nigerian Stock Exchange started 2019 on a high note (when compared with its total performance in the full year of 2019) of 30,619.53 basis points (bps) at the end of January 2019. It however ended the last week of 2019 at 26,842.07 bps on December 31 2019. Its lowest weekly performance occurred on 4th November 2019 at basis points of 26,314.49.

The highest stock performance (in terms of basis points) occurred on the backdrop of the Independent National Electoral Commission (INEC) announcing on Friday 8th February 2019, that it had no plan of postponing the February 16 general elections. This could have been a major reason for the stock market to react to on Monday 11th February 2019.

However, the highest weekly gain occurred in May when the index level jumped by 6.96% from 28,871.93bps on May 10 to 30,881.29bps on May 17 and this came as a result of investors perceiving continuity in projects due to President Buhari being announced as the Winner of the Presidential election. As such, continuity was expected in terms of policies and major projects started by the administration in the first term.

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