Despite the harsh economic environment that characterized the greater part of last year, the total market value of the 264 securities listed on the Nigerian Stock Exchange (NSE) increased from 7.03 trillion naira in 2009 to 9.92 trillion naira by the end of 2010, representing a 41.12% increase, according to NSE’s Interim Administrator Emmanuel Ikazoboh.
“The rise in market capitalization resulted mainly from new listings of equities and state government bonds, coupled with price appreciation by equities. Market capitalization had in 2009 declined by 28.5%,” Ikazoboh told newsmen during a briefing on the activities of the 51-year old exchange in 2010.
He said local and foreign investors were returning to the market after the global economic downturn, with new investors positioning themselves for future benefits.
The Administrator said the country benefitted from the modest global economic recovery, despite the equity price declines and the additional risks in investing in emerging markets, as foreign investors continue to demonstrate confidence in the economy.
“Some of our erstwhile foreign investors are returning, while new investors sought opportunities considering the key attributes of high returns, liquidity and safety of investments,” he added.
Available statistics show that purchases by foreign investors during 2010 is about 381.34 billion naira, representing 48% of the aggregate turnover. This is an increase when compared with the 202.48 billion naira recorded in 2009.
Also by last year end, 17 sub-sectors recorded increased market capitalization of between 3.9% and 622.05%, while 16 sub-sectors suffered reduction in market capitalization of between 2.8% and 48%.
However, two sub-sectors – Machinery Marketing and Aviation – did not record a change in market capitalization.
Twenty companies emerged at the end of 2010 with the highest market capitalization. Dangote Cement Co. Plc, which got listed in the market last year under the Building Materials sub-sector, emerged as the most capitalized company, measured in turn over value with 1.859.3 billion naira.
Nigerian Breweries Plc, which for some years had been the most capitalized, was pushed to the second place with 583.1 billion naira, while Zenith Bank Plc came third with 471.3 billion naira and First Bank of Nigeria Plc fourth with 448.04 billion naira.
The 20 most-capitalized companies as at 2010, accounted for 6.15 trillion naira, representing 77.6% of the equity market capitalization and 62% of the total market capitalization of the exchange.
In 2009, the 20 top equities by market capitalization accounted for 69.5% of the equity market capitalization and 49.4% of the total market capitalization.
The NSE All-Share Index (ASI) increased by 3.943.35 points or 18.5% to close at 24,770.52.
In 2009, the NSE ASI had dropped by 33.8% or 10,623.61 points to close at 20,827.17. The performance of the Index reflects the increase in the prices of quoted equities during the year. By year end, 68 stocks recorded price appreciation and 95 stocks recorded price declines while the prices of 54 remained constant.
Ikazobor said the harsh operating environment led to mixed performance by listed companies, identifying factors such as declining incomes and savings, rising unemployment, weakened purchasing power occasioned by inflationary pressure and investor’s apathy, as responsible for a decline in the participation of Nigerians in the stock market.
Only about 4.3 million Nigerians out of a population of 150 million are currently shareholders of companies listed on the exchange.