The Good, bad and ugly of Nigerian stock market at 59

When it was established as the Lagos Stock Exchange (LSE) in 1960, a lot of people had doubts that the Nigerian Stock Exchange could compete with other developing nation’s exchanges but providence had another plan for the Exchange.

Though it was conceptualised as a limited by guarantee not-for-profit organisation, the growth witnessed in the bourse with its impact on the nation’s economy has proved that it has been thriving on the goodwill, reputation and integrity of its leadership.

The NSE appeared firmly on the path of a radical change in ownership and other related structures with the renewed plan to demutualise the bourse. Later, SEC inaugurated a technical committee on the demutualisation.

Former Chairman, SEC, Senator Udo Udoma, who inaugurated the technical committee headed by a commercial lawyer, Mr Asue Ighodalo said the core mandate of the committee was to review and advise on the processes of demutualisation of the NSE in line with international best practices.

Former Director-General of SEC, Arunma Oteh, said given the outcome of demutualisation around the globe, the Commission believed demutualisation was critical for the growth of the Nigerian capital market.

Shortly after the former Governor, Central Bank of Nigeria, Prof. Charles Soludo, introduced the 2005 banking recapitalisation exercise, the market witnessed a dramatic turnaround as it capitalisation increased to about N13 trillion.

But following what was described as the worst crisis to hit the Nigerian stock market in the first half of 2008, investors’ wealth was reduced by a significant two-third of the market total value from about N13 trillion to a little over N4 trillion.

The meltdown in stock prices, the worst recorded in the history of the 59-year-old market earned it the highest declines posting amongst other African Exchanges in the first quarter of 2009. The huge bad loans granted by banks to operators in the market brought the value of stocks to all-time low.

The NSE’s All Share Index, the barometer for the movement of the market, fell by 37% in the early part of the year, the steepest quarterly decline in more than a decade and the worst of 89 benchmark indexes tracked by Bloomberg.

The market major indicators – the All-Share Index crashed to an all-time low 21, 715.82 basis points by the end of January 2009, from its opening of 29,176.80, reflecting a remarkable 44, 655.38 or 67.28% decline from the pre-crisis Index of 66,371.20. Similarly, the total market capitalisation of all listed equities declined significantly by over N7 trillion to N4.857 trillion from N12.623 trillion, representing 61.52% decrease.

But as at the end trading on September 30, 2019, the market rebounded. The ASI stood at 27.630.56 and the market capitalisation ended the day at N13.45 trillion.

The Nigerian Stock Exchange services the largest economy in Africa and is championing the development of Africa’s financial markets.  The NSE, a registered company limited by guarantee, was founded in 1960 and it is licensed under the Investments and Securities Act (ISA) and is regulated by the Securities and Exchange Commission (SEC) of Nigeria.

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The Exchange offers listing and trading services, licensing services, market data solutions, ancillary technology services and more.

The NSE continues to evolve in order to meet the needs of its valued customers and to achieve the highest level of competitiveness.  It is an open, professional and vibrant exchange, connecting Nigeria, Africa and the world.