Political risks are big threats not only to the Nigerian stock market, but to other markets across the world, a report has showed.
Beyond the falling crude oil prices and the devaluation of the naira, the Nigerian equities market has had a poor year with the Nigerian Stock Exchange All-Share Index year-to-date return currently 22.08 per cent negative.
Analysts had predicted earlier in the year that considering that the build up to general elections would affect the market negatively.
In September, the Chief Executive Officer, Nigerian Stock Exchange, Mr. Oscar Onyema, had said the country’s equities market would see stronger movements after the general elections.
“We anticipate that once the elections are out of the way and we have a better clarity on the security and health situation, you should see a more definite movement in the market,” he said.
According to a report by the British Broadcasting Corporation, the big risks to markets and the global economy right now are political risks, or decisions by governments that spook investors.
One event that had spooked investors this year, according to market operators, was the sudden removal of Lamido Sanusi as the Central Bank Governor. Another was the regulatory headwinds that led to a drop in the profits of Deposit Money Banks.
In China, on Tuesday, the BBC report noted that the price of shares on the Shangai stock market dropped by more than five per cent “seemingly prompted by a new restriction on how investors can borrow – which raised anxieties about the sustainability of the country’s debt-financed growth.”
It added that in Greece, the decision by the prime minister to call a parliamentary vote to elect a new president was seen to increase the probability of the left-wing Syriza party winning power in a general election, which caused near panic among investors, because Syriza is so passionately committed to writing off Greece’s still huge debts and abandoning the terms of its IMF and eurozone bailout.
“That led to a massive 11 per cent drop in Greek shares and a sharp fall in the price of Greek government debt – which then infected stock markets all over Europe and North America.”
Russia is also heading into recession due to political risks and the fall in oil prices, political risks were also affecting Brazil’s stock market, which had now fallen by 20 per cent from its September peak.
Beyond the falling crude oil prices and the devaluation of the naira, the Nigerian equities market has had a poor year with the Nigerian Stock Exchange All-Share Index year-to-date return currently 22.08 per cent negative.
Analysts had predicted earlier in the year that considering that the build up to general elections would affect the market negatively.
In September, the Chief Executive Officer, Nigerian Stock Exchange, Mr. Oscar Onyema, had said the country’s equities market would see stronger movements after the general elections.
“We anticipate that once the elections are out of the way and we have a better clarity on the security and health situation, you should see a more definite movement in the market,” he said.
According to a report by the British Broadcasting Corporation, the big risks to markets and the global economy right now are political risks, or decisions by governments that spook investors.
One event that had spooked investors this year, according to market operators, was the sudden removal of Lamido Sanusi as the Central Bank Governor. Another was the regulatory headwinds that led to a drop in the profits of Deposit Money Banks.
In China, on Tuesday, the BBC report noted that the price of shares on the Shangai stock market dropped by more than five per cent “seemingly prompted by a new restriction on how investors can borrow – which raised anxieties about the sustainability of the country’s debt-financed growth.”
It added that in Greece, the decision by the prime minister to call a parliamentary vote to elect a new president was seen to increase the probability of the left-wing Syriza party winning power in a general election, which caused near panic among investors, because Syriza is so passionately committed to writing off Greece’s still huge debts and abandoning the terms of its IMF and eurozone bailout.
“That led to a massive 11 per cent drop in Greek shares and a sharp fall in the price of Greek government debt – which then infected stock markets all over Europe and North America.”
Russia is also heading into recession due to political risks and the fall in oil prices, political risks were also affecting Brazil’s stock market, which had now fallen by 20 per cent from its September peak.
No comments:
Post a Comment