GUARDIAN

 Tuesday, September 25, 2007

Why Nigeria's stock market remains immuned to global shocks, by experts

By Gbenga Agbana

NON-integration of the Nigerian stock market with other developed bourses may have been responsible for its seeming apathy to happenings in the developed markets of Europe, United States and Asia, going by explanations volunteered by experts in Lagos yesterday.

Responding to enquiries by The Guardian on why the indices of corporate performance, the All-share index and market capitalisation dipped last week, despite the surge in indices worldwide, stockbrokers said happenings in those developed markets do not have direct impact on the country's market, since our market is not opened up yet.

Last week, when the U.S interest rates were reduced to 4.75 per cent, all the developed countries' capital market indices soared in anticipation of better performance in the corporate world.

For instance, the U.S stocks posted the biggest weekly gain since March, pushing the Dow Jones industrial average to within 181 points record after the Federal Reserve cut its benchmark interest rate.

Asian stocks were also showing positive signals last week securing to have more funds in coming months as global investors take shelter from a deepening U.S housing shrimps, according to agency reports.

Chinese stocks also recorded a record high on Friday as turnover in Hong Kong was the second highest ever.

However, the All-share Index of the Nigerian Stock Exchange fell last week by 2.52 per cent to 50,946.53 points from 52,264.11 points at which it opened for the week, while market capitalisation closed lower at N8.02 trillion from N8.2 trillion.

Commenting on the development, the Managing Director of Goldman Assets, Mr. Olu Abayomi Sanya said the Nigerian stock market is not really integrated with the international markets.

He however, said the development in the United States could have effect on the Nigerian market if some investors, both institutional and individual, decide to come and invest in our market by bringing in the somewhat cheap funds.

"People will have cheaper fund to borrow in the markets to invest. On Eurobonds, it will have positive effect," he said.

Also, the President, Chartered Institute of Stockbrokers (CIS), Mr. Dipo Aina said happenings in those markets cannot have direct effect on the Nigerian market because we operate from different jurisdictions.

Aina said: "We are two different jurisdictions. So their own market cannot affect ours. If investors in the U.S want to invest here, there is tendency that they will get cheaper funds relatively. The effect is basically that they will have high returns. It will deepen the depth of the market and renew confidence in the market."

Henry Olayemi, the immediate past president of the CIS, said there is no correlation between our market and the developed ones.

His words: "There is no correlation. Our market is not opened up yet. The stocks here are only traded and rated here. It does not affect our market here."

NM NOTE:

For Stock Markets around the world, see (for example): 

http://www.wall-street.com/foreign.html