The market indices at the Nigerian Stock Exchange (NSE) closed downward in the trading week ended 7th February, 2020. The bearish market recorded a decline in the All-Share Index (ASI) and market capitalization index by 2.69% and 1.61%, closing at 28,067.09 points and N14.618 trillion respectively1. All other market indices depreciated with the exception of the NSE Insurance and NSE Alternative Securities Market (ASeM) Index. The worst hit were the NSE Industrial Good Index and NSE-Meristem Value Index which declined by 4.07% and 3.94% respectively. Significant losses were recorded in both medium and large capitalized stocks such as MTN Nigeria and Nestle Nigeria. Given the global economic slowdown due to the coronavirus outbreak as well as banks reluctance in lending to the real sector, the NSE market is expected to continue on a downward trend. While investors are advised to take advantage of the lower price of equities by purchasing shares of listed companies, the Securities Exchange Commission should adopt more robust and strong regulations, specifically the recapitalization of capital market operators. This will strengthen the resilience of operators and ensure that Nigeria’s capital market is globally competitive.
February 21, 2020
Nigeria Economic Update (Issue 6)
Activities in the manufacturing sector remained at levels recorded in 2016Q3. Specifically, manufacturing capacity utilization (a measure of potential manufacturing output that is actually realized) remained at 48.46 percent in 2016Q4 below average. During the quarter, structural bottlenecks such as epileptic power supply (average of 2, 548 Megawatts) in addition to forex constraints, hampered manufacturing activities. As such, high cost of raw materials and cost of production subdued activities in the short term. Recent efforts by the monetary authority to increase forex access to the manufacturing sector as well as improvement in gas supply and electricity generation would help minimize production costs and enhance production process.
Recent data on Nigerias labour market points to a rise in the rate of unemployment and underemployment in 2015Q4. Specifically, compared to 2015Q3, the rate of unemployment and underemployment rose to 10.4 per cent and 18.7 per cent from 9.9 percent and 17.4 percent respectively. These statistics however masks the true situation of the youth employment in Nigeria. Disaggregated data by age category shows that unemployment and underemployment within the youth age category (15-24) was remarkably higher than the national average, at 19 and 34.5 per cent respectively.
The NSE market indices recorded a bear market rally for the third consecutive week in September. Specifically, All-share index and Market Capitalization increased marginally by 0.31 percent to close at 28,335.40 points and N9.73 trillion respectively on September 30, 2016. Major drivers of the rally include; increased trade-volume of financial, agricultural and consumer-goods securities. The continued rise in market indices may be connected to a sustained investor confidence in the agricultural and financial sectors on the account of the ongoing activities of the government and the CBN to stabilize the sectors.