Having experienced upturns and downturns in 2009, many expect that the storm is over for the Nigerian capital market, and there seems to be a light of hope in 2010. KAYODE OGUNWALE and BUKOLA IDOWU write on the expectations of capital market operators in the New Year.

Introduction
FOR the Nigerian capital market, the year 2009 is one that would be remembered for a long time to come and the lessons learnt indelible. The year started out on a sour note as the full impact of the global financial crisis hit the Nigerian economy. The initial argument made in 2008 that the Nigerian economy was largely insulated from the global economic crisis was proved wrong.
Investment analysts had predicted that the market would rebound and gain at least half of what it had lost in 2008 and early 2009. However, just as the rebound was about coming through, the sanitisation of the banking sector embarked on by the new governor of the Central Bank of Nigeria Mallam Sanusi Lamido Sanusi, created a spark that hit not only the money market but the capital market negatively.
The banking reform, which started at the second half of the year, returned the bearish trend that lasted till the end of the year, with financial stocks bearing the biggest brunt of the downturn.

Indicators’ Performance
The market capitalisation of 300 securities listed on the exchange dropped by N1.968 trillion or 28.3 per cent from N6.957 trillion to stand at N4.989 trillion by year-end. The decline in market capitalisation resulted mainly from price depreciations by equities. The Nigerian Stock Exchange All-Share Index dropped by 33.8 per cent or 10,623.61 points to close at 20,827.17 from 31,357.24 points it opened the year.

Expectations
Operators in the capital market are optimistic that the market would finally regain its lost value in the New Year. Mr. C.S. Anyanwu, a stockbroker who spoke with BusinessWorld on his expectation in 2010, said, considering the instruments being put in place by the government in growing the market and the economy at large, there is a greater hope that the market would recover from its losses.
He explained that the proposed AMC, which is designed to mop up toxic assets, would provide more funds to play the market. He also noted that the recovery of global markets would also impact the Nigerian capital market positively.
According to him, “The global economic meltdown created a ripple that affected Nigeria negatively, and since they are now picking up and recovering from their losses, it is expected that the positive trend would also trickle down to the Nigerian market, helping the market to wake up and regain its losses.”
He however encouraged investors who had given up on the market to return and take position now that most of the stocks are selling at their lowest prices, adding that “those entering the market now will have nothing to regret as the stock in the market have shown that they have good fundamentals through the good returns that they are posting.”
Analysts reiterate that the decision of the new management of the troubled banks to make full provisions for the non-performing assets remained healthy for the market. FSDH however maintained a positive view about 2010, adding, “Going forward, we expect banks’ financials to show true and fair position. We maintain that discerning investors should take advantage of the current low prices in stocks in the market to take strategic position ahead of appreciation, which we expect toward the end of Q1, 2010.” Niyi Falade, chief executive officer, Crusader Sterling Pensions Limited, believed investors had nothing to fear in 2010, noting that “it is a year of recovery.”
But Adedotun Adebanjo, an investment analyst, stated that the market might not recover totally. “If the reports are true that banks and others are laying off staff, then what we are just doing is what the rest of the world has done, confirming that Nigeria is about nine months behind the rest of the world in doing things.” Adebanjo added that the year 2010 would offer astute investors opportunities.
According to Mallam Kasimu Kurfi, managing director and chief executive of APT Securities and Fund Limited the year 2010 is expected to see recoveries of stocks in the banking, building, food and beverages, agriculture, oil and gas, and insurance sectors.
He noted that “the incorporation of the Asset Management Company by the CBN in other to mop the toxic assets with an initial provision of N250 billion which could be increased to N1 trillion, is a plus to the market. A lot of excess shares in the market will be moped up and the share prices would start rising.”
He said the petroleum reform bill which the National Assembly has promised to release to speed up the deregulation of the oil industry would impact the oil stocks positively, while the share prices of agriculture stocks are expected to soar with more subsidy and the investments made by the federal government in agriculture.
Adding that the insurance sector may also indirectly benefit from what is happening in other sectors, Kurfi said, “The year 2009 is the year of hope and recovery, and investors should carefully look at these and make their good selections.”

Conclusion
The general trend seems to be optimism that with the federal government passing the 2010 budget speedily pushing more funds into the economy, and the AMC which is expected to mop up toxic assets and provide more funds to play in a transparent market, the rebound of the capital market is sure.
Despite the declines in key market indicators, the fundamentals of the stock market remained strong as indicated by strong corporate earnings and growth potentials.
We believe that the focus for 2010 should be on revamping production in the non-oil sector through the provision of an enabling economic environment that can attract sustainable investment, and the oiling of the economy through the necessary provision of credit by the banks.