The government titled the 2015 budget as a “Transition” budget, which is apt considering the situation of the economy, as well as the fact that elections are coming up, and the new government may or may not continue with this budget for the full year. One of the main focus areas for the budget is the de-risking of the economy from oil revenues.
The NSEASI shed 14.0% ytd through to Friday, and 13.0% in the first week of the month alone. We should view the underperformance relative to Nairobi (+2.1%) and Johannesburg (+0.1%) in the context of the oil price.
The change witnessed in the economic fundamentals in recent times, has great tendency to put the income streams of the blue chip stocks under intense pressure, which is not peculiar to these BIG FOUR. The devaluation of Naira, the stringent monetary policies coupled with unusual directives by CBN on the FOREX in the face of falling oil price have no doubt perturbed the earning capacity of the market-heavy-weights in key active sectors.
There is no doubt that 2015 would be more challenging economically, as we settle down into the New Year. We expect weaker consumer tendency and very low spending as Federal Government the BIG spender appears broke, without rational, feasible and coordinated plans in place to stimulate SMEs activities and encourage players in the (in)formal sector to hold firm ground.
"No business is eager for regulation and it is only natural to expect less zeal for almost any aspect of the job on the part of a self regulator than may be true of an outsider whose own business is not involved." - US SEC in a Special Study of the Securities Markets conducted in 1963
The Nigerian Capital Market experienced a myriad of highs and lows in 2014, as the market recorded negative performance (as the key indicator NSE ASI depicts) with a Year to Date of (16.14%) as at December 31, 2014. However, Primary market activity which is part of the key parameters that help to measure capital market growth and efficiency improved in the year under reference.