By Peter Egwuatu & Nkiruka Nnorom
LAGOS — Amidst continued pressure in the foreign exchange market, the Nigerian Stock Exchange, NSE, yesterday said the continued slide in the stock market indices is a fallout from the volatility of the foreign exchange rate as well as uncomplementary economic policies of the government.
Chief Executive Officer, NSE, Mr. Oscar Onyema, while presenting the stock market outlook for 2016, said the NSE expected 2016 to be challenging for the market after the index shed 17.4 per cent last year with losses continuing into this year, as oil prices plunged and the domestic economy faltered.
According to him, “the prevailing volatility in the foreign exchange rate in the country will continue to pose challenges to the growth and recovery of the Nigerian stock market.
He said: “Foreign equity investors, who accounted for 54 per cent of trading volumes, were on the sidelines owing to the lack of clarity on Nigeria’s forex policy and Naira weakness.”
Onyema, who stated that the exchange anticipates return of investors, who have been on the sideline since the slump in crude oil prices commenced in June 2014, said the current instability in the Naira could make the dream unrealisable.
According to him, “investors are not as much bordered about the Naira exchange rate to the dollar as they are about instability in the currency. Investors are also concerned about the credibility of the exchange rate policy before committing their resources to a particular stock.
“If the exchange rate is stable, investors will be able to make investment decision, but whereby the exchange rate continues to be volatile, it will be difficult for them to invest.
“Investors want to be sure that there is stability in the currency; they want to know that rate does not keep changing every day.”