By Helen Oji
Rising from the lull in trading activities recorded in the equity sector of the Nigerian Stock Exchange (NSE) in 2019, the performance index soared by 50.03 per cent in 2020, making Nigerian stock the best performing globally.
From a negative return of 14.60 per cent in 2019, the All-Share Index (ASI) which stood at 26,842.07 basis points at the beginning of the year closed at 40,270.76 points as of December 31, 2020, representing 50.03 per cent growth.
Similarly, market capitalisation increased by N8, 098 trillion to N21, 056 trillion from N12.958 trillion at which it opened trading for the year.
Operators at the weekend linked the unprecedented rebound to the policy directives, which caused fixed income yields to decline precipitously, thereby offering some respite to the domestic bourse.
They urged the government to intensify its intervention efforts by extending a bailout to other critical sectors to mitigate the effects of the coronavirus pandemic and sustain market rebound.
According to them, the rollout of more intervention measures will quicken economic recovery as shown by the recent marginal improvement in macroeconomic indices.
Performance indices improved reasonably in 2020 due to the combination of expansionary monetary and fiscal policy which helped mitigate the initial shock of the pandemic at the first quarter of the year.
For instance, NSE Industrial Goods index led with 72.88 per cent gain. NSE Premium index followed with a gain of 60.41 per cent, while NSE Insurance index rose by 48.04 per cent.
NSE Lotus II, NSE 30, NSE Pension and NSE Banking indices closed the year in positive territory with a gain of 46.14 per cent, 33.15 per cent, 30.82 per cent and 10.76 per cent, respectively.
On the other hand, NSE Oil and Gas in the period under review declined by 14.01 per cent while NSE Consumer Goods shed 2.81 per cent.
A look at market performance across sectors showed that while NSE consumer goods and NSE oil/gas declined by 3.29 per cent and 13.84 per cent in 2020, industrial goods and insurance posted 90.81 per cent and 50.61 per cent rate of returns in the previous year. NSE banking also recorded 10.14 per cent increase during the period under review.
According to operators, the fall in oil prices triggered multiple devaluations for the economy, in addition to the devastating effect of the COVID- 19 crisis within the period.
They noted fundamentals were not strong enough to drive a natural correction in the equity market, stating that the two contending issues negatively affected the stock market, causing investors wealth to decline by 20 per cent in the first quarter
But the deliberate actions by the fiscal and monetary authorities to drive interest rates down significantly, in addition to various intervention programmes, were the primary triggers of the gains.
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