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‘Rebasing negatively affected NSE’s market capitalisation to GDP ratio’


The recent rebasing of the nation’s Gross Domestic Products, GDP, undertaken by the Federal Government has negatively impacted the contribution of the Nigerian Stock Exchange, NSE’s market capitalisation to the GDP, says Oscar Onyema, the Chief Executive Officer of the NSE.


He spoke at the second quarter Capital Market Committee, CMC meeting held in Lagos, saying that following the rebasing, the market capitalisation to GDP ratio has dropped to below 20 percent.

According to him, the figure highlights the importance of getting more investors to participate in the market, as well as getting more companies to list.

“The market capitalisation to the GDP ratio before the rebasing was bad and with the rebasing, it has even become worst, I think down to 16 to 20 percent.

This highlights the fact that we need to get more people involved; we need to bring more companies to list in the market to raise the market capitalisation to GDP ratio significantly,” he stated.

“The second impact of rebasing is that initially, we thought that agriculture made up about 40 percent of the GDP and we highlighted four industry categories that we wanted to focus on, but after the rebasing, we have since realised that we need to go back and look at the sectors that make up the GDP now and refocus our energy on those sectors,” he added.

On how to encourage more retail investors’ participation in the market, he said, “It is true that a lot of retail investors got their fingers burnt during the market crash of 2008, but we believe that given the rebound we have seen in the market, it presents a good opportunity for entry point to people.

“However, the way they come in and the way they access the market is completely different and people really need to understand that the market has an inherent risk and we have to find way to manage the risk.”

Continuing, he said, “For retail investors that do not understand how the market works, I will advise them to seek the advice of professionals or use the collective investment schemes because you don’t put money on the table and look away. You have to continue to do either fundamental analysis or technical analysis and do stock taking.

If you are a retail investor, that is not advisable, because you don’t have the right fiber to do that.”

He also advocated creation of more awareness, especially for retail investors, saying “There is financial literacy sub-committee of SEC that is taking the lead in making sure that we properly educate investors, policy makers and other stakeholders on the major characteristics of the market and how they operate generally.


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