Investors in Nigerian equities lost about N1.71 trillion in 2019 as a combination of political risk, weak macroeconomic performance and tense global outlook drove the stock market to second consecutive negative performance.

The stock market closed yesterday with negative average full-year return of -14.60 per cent for the 2019 trading year, equivalent to net capital depreciation of N1.71 trillion for the year. It had recorded negative average full-year return of -17.81 per cent in 2018.

The All Share Index (ASI)- the common value-based index that tracks all share prices at the Nigerian Stock Exchange (NSE) closed yesterday at 26,842.07 points as against its opening index of 31,430.50 points for 2019, which was also the closing index for 2018. It had opened 2018 at 38,243.19 points.

With average return of -14.09 per cent by November 2019, the average decline of 0.59 per cent recorded in December 2019 nudged the full-year return to -14.60 per cent. The December 2019 negative performance marks the first time in 10 years that the market suffered a relapse in the last trading month of the year.

The negative average full-year return of -14.60 per cent implies that investors in the Nigerian stock market lost nothing less than 14.6 per cent of their portfolios during the year. However, with higher losses in several sectors, actual losses by most investors may be higher than average benchmark.

Aggregate market value of quoted equities closed 2019 at N12.958 trillion as against its opening value of N11.721 trillion for the year. The seeming appreciation in the year-to-date performance of aggregate market value of all quoted equities was due to the unabsorbed boost from the listing of two leading telecommunication companies- MTN Nigeria Communications Plc and Airtel Africa Plc.

Based on market values, both the ASI and market capitalisation are correlated indices and without new listing or delisting, usually move simultaneously in the same direction. But the ASI is weighted, and as such adjusted for effect of new listing while the market capitalisation is a straight-line summation of share prices and issued shares. Thus, where the ASI and market capitalisation differ, the ASI is widely regarded as the true representation of the market condition.

Chief Operating Officer, GTI Securities Limited, Mr. Kehinde Hassan said the market as a barometer of the national economy reflected the uncertainties that characterised the 2019 business year.

He however noted that the fundamentals of the market, as shown by the operational and financial performances of quoted companies, remain strong despite the price depreciation

The 2019 pricing performance marks the fifth negative closing in six consecutive years. After a world-leading positive return of 42.3 per cent in 2017, the market had reversed to negative in 2018 with average full-year return of -17.81 per cent. Aggregate market value of all quoted equities at the NSE had declined by N1.889 trillion in 2018. The stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion.

Most analysts agreed that political risks, security risk and macroeconomic uncertainties were major factors that adversely impacted the capital market. The intense political activities in the run-up and aftermath of the 2019 general elections further fuelled macroeconomic concerns as investors waited on the sideline for clear macroeconomic direction.

With foreign portfolio investors accounting for nearly half of transactions at the Nigerian stock market, the tense global economic outlook, trade disagreements among major economies, decline in crude oil price and attractive yields in less-risky economies compounded the Nigerian market situation. (The Nation)