By Nkiruka Nnorom

The Chief Executive Officer of the Nigerian Stock Exchange, NSE, Mr. Oscar Onyema, has called on the federal government to address the uncertainties in its policies to stall further crash of the stock market. The equities market extended weekly losses for the fourth  consecutive week as the local bourse closed in the negative at the end of trading session on Thursday, August 27, 2015.

Nigerian Stock Exchange

Consequently, the All Share Index (ASI) declined by 1,656.58 basis points or 5.5 per cent to close at 28, 221.75 points on Thursday from 29,878.33 points on Friday, August 21, 2015. Similarly, market capitalization slumped by N542 billion or 5.3 per cent during the same period, closing at N9.699 trillion from N10.241 trillion on Friday, August 21, 2015.

On Monday alone, the twin indicators, the ASI and market capitalisation, crashed the most, dropping by 2.2 per cent, an action the NSE termed ‘an over-reaction by investors’. According to Onyema, who spoke in a chat with newsmen in Lagos, investors loath uncertainty and would begin to react positively if the gray areas are removed.

“Concerning the current challenges we are facing, I have to say that our market is reflective of the economy, and as you know, the economy towards the end of last year faced significant shots from crude oil prices and that has impacted the foreign exchange rate, and created uncertainties in the market place.

“As you know, investors do not like uncertainties and as we begin to remove the uncertainties around exchange rate, around economic policies, you will see investors be able to appropriately react to the removal of these uncertainties. That is the feedback that we are getting from investors” Onyema declared.

Speaking on reverberating effect of the crumbling economy in China on the global markets, Onyema said ” As you know, we are living in a hyper-connected world; a world where shocks in one region end up manifesting themselves in another region. We’ve seen a slight slowdown in China and two currency devaluation that have sent some shocks.

“When you compare them to the fact that the U.S is beginning to consider whether they should start increasing interest rate, and you also have the situation in Europe and Greece, which is really a European story. So if you have all of that, and you are looking from a global perspective where we are looking to have global growth of 3.5 percent, and we have the largest second economy in the world slowing down, which is a major source of that growth that we have seen across the globe. Sure it is going to affect economies that are highly connected to such economy.”

Speaking in the vein, David Adonri, Managing Director, Highcap Securities Limited, said that absence of clear policy direction by the present administration is contributing in no small measure in depressing equities prices. He affirmed that the crumbling share prices in global markets would not have had much impact on the local bourse if “we have clear policy direction and if our economy us self-regenerative.”