Nigeria, sub-Saharan Africa's second biggest equities market after
South Africa has long been an attraction for emerging market
investors. But the Nigerian stock exchange has slumped to record
levels in the past few months, making it one of the worst performing in
the world, and feeding worries about the future.
In 2008, the market value
of stocks listed on the Nigerian stock exchange declined for the first
time in nine years, tumbling 46 percent. Stocks fell 31 percent in
January 2009, the world's biggest decline, and the trend is showing no
sign of easing.
A Lagos-based stock broker, Patrick Ezeagu, says
confidence in the stock market took a severe knock last year following
the exit of foreign investors seeking safety amid the global credit
crunch.
"Things were going normal until we had this bust," he
said. "And I think that the whole thing was precipitated from outside
the system. Because we had some hedge funds that came, which helped to
buoy up the market.
"And then when the West had their own problems, the
first thing they did was they go offshore to divest and then run home
to go and solve their own problem. That going offshore, gave us the
first shock we had and other things followed. Because everything was
going on well until that happened," he added.
Purchases by foreign investors amounted to $1.2 billion in 2008, compared to more than $2 billion in 2007.
The
Nigerian stock exchange has 213 listed equities and a market value of
about $46 billion, according to the exchange Web site.
The
Nigerian stock exchange said this week it planned to introduce new
measures in the first quarter of 2009, as part of moves aimed at
attracting foreign investors.
Analysts say Nigerian stocks are
unlikely to recover this year, but have huge potential in the longer
term, with the country's population of 140 million people representing
a largely untapped market.
