The outbreak and spread of the coronavirus (COVID-19) has severely impacted the world economy with many industries suffering including the financial markets. The impact of the novel virus was so pervasive and destabilising that the World Health Organisation quickly declared COVID-19 a pandemic. The health, social and economic effects of the virus continue to be felt given the rise in the number of cases and deaths, with many companies frantically deploying survival strategies or throwing in the towel by way of filing for bankruptcy.
In global markets, the pandemic has inflicted record losses in numerous markets including advanced securities exchanges that one would expect minimal impact given the sophistication and financial muscles of such markets. Various exchanges in Asia, where the virus was first reported in December 2019, have experienced varying losses recorded by leading markets like Shanghai Stock Exchange Composite Index, Nikkei Stock Average Index. Europe has been not spared in the sweeping spread of COVID-19.
Market Performance in Africa
At the second stakeholder engagement session held virtually on May 27, 2020, the CEO of The Nigerian Stock Exchange, Mr. Oscar Onyema, revealed that despite the impact of COVID-19 on the African market, the NSE has been able to withstand the shock. According to him “Supported by recovering oil prices, resumption of economic activities and attractive valuations, the NSE ASI has rallied since April. The NSE ASI has returned -6.1per cent YTD while JSE/FTSE ASI stands at -13.1per cent; Nairobi ASI at -15.6per cent; BRVM Composite at -17.5per cent; and EGX 30 at -27.6per cent.
The Nigerian Capital Market remains very attractive in terms of dividend yields and market valuation ratios”. The trading numbers obtained from the NSE showed that market transactions have been driven by domestic investors accounting for 59per cent of the equity value traded. This represents a significant shift from the previous 4-year average of 51per cent from 2016 to 2018.
Foreign investor participation has dropped to 41per cent from an average of 49per cent of transactions. Looking at the sectorial performance, on one hand, the financial services sector has dominated the trading turnover at 63per cent of transactions with the consumer goods sector at 14per cent; Industrial goods at 9per cent; ICT at 7per cent; Oil and Gas at 4per cent.
While on the other hand, the NSE Industrial Goods is the best performing sector in terms of returns at 8.66per cent YTD with the NSE Banking […]