BY CHINEDU IBEABUCHI

Notwithstanding the bearish trend amounting to about N1.4 trillion recorded in the Nigeria Stock Exchange (NSE) last year, the Chief Executive Officer (CEO) of the Exchange, Mr Oscar Onyema has expressed a positive turn around for the capital market in 2012, pegging this on the Council and the management team of the Exchange’s effort to continue market reforms that would champion the acceleration of Nigeria’s and Africa’s economic development.

The CEO, who said this in his presentation at the Public Hearing organized by the House Committee on Capital Market in Abuja yesterday, said that it was unfortunate that the market lost approximately N1.4 trillion in market capitalization in 2011. As the reforms continue, and with government support, we remain confident that by year’s end, the market will be well on its way to recovering its vibrancy”, he assured.

Onyema asserted that the nation’s capital market has emerged stronger and more focused from the financial meltdown of 2008, revealing that in the 13 years before the 2008 financial meltdown, the Nigerian equity market recorded over 1,200 per cent return on investment.

According to him, “the new Nigerian Stock Exchange provides a vehicle for long-term ‘saving’ and ‘borrowing’, and hence, efficient use of financial resources.  The current market cycle presents an incredible opportunity for investors,” he added.

Recounting the factors that brought about the downward trend, Onyema noted that these losses were driven by: the soft global economy, including the debt crises in the U.S. and European Union – EU accounts for 22 per cent of foreign portfolio investment into Nigeria; the Nigeria banking crisis (including nationalization of three banks in August).

“The lack of investor confidence triggered by losses incurred during the financial meltdown of 2008/2009; the lack of liquidity and depth in the market; concerns about the security situation in the country; and rising interest rates (MPR has been raised in the past three months from 8 per cent to 9.25 per cent, and just this week, to 12 per cent) which is encouraging investors to shift from equity to fixed income investments,” he concluded.