Economy
2016 Recap and 2017 Market Outlook
By Ambrose Omordion
History has been made in the Nigeria capital market. For the third consecutive year, the benchmark All-Share Index of the Nigerian Stock Exchange (NSE) again contracted.
The 2016 contraction, unlike those of 2014 and 2015 was a single digit decline, fueling hope of a recovery soon.
The single digit contraction however resulted from the year-end seasonal trading volatility witnessed in the last few trading week of 2016, triggered by the low stock valuation and the agreement by members of the Organisation of Petroleum Exporting Countries (OPEC) to cut supply of crude oil to the international market as part of measures aimed at stabilizing oil prices.
The agreement was enhanced by the support of Russia, a major producer and non-member of the cartel, which also announced a cut in its production output. Market reaction to the news of the agreement which becomes effective this year, resulted in the gains by players in the NSE’s oil and gas sector as tracked via the Oil & Gas index.
The year 2016 was however rough for market players and analysts as unexpected events, negative economic data and company numbers continued to deepen to reflect the prevailing economic recession.
It is nonetheless obvious that during the year 2016, lack of concrete economic policies to give direction and the non-coordination of economic managers was also a major factor that affected domestic and international investor confidence in the market and the economy at large.
There was the impact of the delayed budget, coupled with the tight monetary policy regime adopted by the Central Bank of Nigeria (CBN).
The non-complementarity of fiscal and monetary policies was also evident, as both rather moved in opposite directions to the detriment of the masses, with the economy contracting in the first three quarters of the year as revealed by GDP numbers released by the National Bureau of Statistics (NBS).
The NBS on Saturday noted that if Nigeria must hold the unemployment rate at the current level of 13.9%, its economy must generate over 2.6 million annually, lamenting that the magnitude of employment in the country has not been sufficient to meet the ever-growing labour market, hence the continuous rise in the level of unemployment in the country.
The regulators of the market: SEC and NSE, recorded improvements despite the mixed general performance of the market for the year to close lower.
The development and growth of the nation capital market was highly driven by technology that continues to transform the face of the market and enhance transparency thereby restoring both domestic and international investors’ confidence in market activity.
Technology has also continued to make trading and investing simple with the online trading platforms that allows investors place trade from the comfort of their homes and offices, coupled with access to real market information that quicken investment decisions as more market operators creating online portals for their clients to trade directly on their own.
The composite index NSE ASI for the year shed 1765.68 points to close at 26,874.62 from an opening figure of 28,642.25 representing 6.16% decline after it had hit a high of 31,127.82 and low of 23,311.95 within the year under consideration.
The year started with a negative outlook in January which was characterized by the post-election fear of the leadership and economic management style of the new government, with share prices (especially of most blue-chips), volume and value recording new lows stocks, virtually all the indices crashed for that period.
They reversed up in February with oscillating movement that lasted five months, touching a high of 31,127.82points in June before pulling back to experience mixed performance of up and down movements, extending the periods of market bearishness that lasted for another five months (most notably from June to November) and these conditions made the latter part of the year quite interesting for many traders, before the end of the year rally reversed the bearish trend to close the month of December in green.
The Santa Claus rally effect was visible on the exchange.
The other leg of the market which is the primary market had low activity, compared with the previous years as all proposed Right Issues, public offers or initial public offers were postponed due to uncertainties and low confidence of investors in the market, despite all the efforts of market regulator to admit more companies to the exchange. One company was however admitted for listing at the alterative market sector during the year.
As the market repositions to play its role in the nation’s economic development, government must introduce policies that will attract small and medium companies to sources medium and long fund from the stock market.
The market’s sectoral indices showed that two out of the 11 indices closed the year positive. They are: which are NSE Premium index and NSE Banking Index with 6.98% and 2.17% respectively, while others were in red apparels.
The loss suffered by the market in 2016 was attributed to many factors including unstable global financial market resulting from low price of crude oil at the beginning of the year, sell down in china’s equity market, unexpected vote by Britons to leave the Eurozone and the unexpected victory of U.S president-elect Donald Trump.
Also on the local scene, there were the effects of high interest rate, hyperinflation, high unemployment and low national output that led to the ongoing recession that affected the general earning power of Nigerian that to no savings no investment. Liquidity was also a challenge, with its negative effect on the market, leaving the scene for foreign portfolio investors who tend to be unstable, moving in any direction as dictated by owners of the funds who combed in and out of the market.
The situation was not helped by the failure of the registered market makers to take off, as they are financially handicapped to play the role of stabilizing the system.
The regulators of the financial market need to come together to fashion ways that funds can flow into the market to ensure it performs its role in economic development and growth effectively.
Moreover, we would like to share our top trading themes in 2017 and where stocks, sectors, domestic and global economies are headed in the first quarter of 2017 and beyond.
In our INVEST 2017 SUMMIT held on December 3, 2016, top 10 recession proof stocks were discussed as only 18 stocks out of 219 listed companies that will grow their dividend for 2017 were recommended for investors and traders that participated at that event and these are companies with strong earnings capacity and support high pay-out ratios and high dividend yields with returns better than those of fixed income assets and cushion against the nation’s inflation rate, while the NSEASI posted a loss of 6.16 per cent in the same period. Other stocks can be traded with Technical Analysis using Support and Resistant trend line.
Over the past year the three stocks that recorded triple digits appreciation in price have recovered from 2015 down sell as a result of positive market sentiments and strong financials. Also, 13 equities recorded two digits capital growth for the same period to create value for investors.
In all, a total of 27 stocks, including the single digit gainers, were the best performing for the year.
The top five are Dangote Flour with 276.11% gain; United Capital, 108.4% capital appreciation; while Total Nigeria, Seplat and Mobil Oil recorded capital growth of 103.39%, 87.19% and 74.38% respectively. The domination of the top gainers’ table by petroleum stocks may likely continue in the New Year with other stocks that had performed well within the period.
On the flip side, over 55 stocks were among the worst performers for the year.
The top five are: Forte Oil that lost 74.42%; and Skye Bank, 68.35%; while Calverton, Diamond Bank and Sterling Bank were down by 63.56%, 61.74% and 58;47% respectively.
For profitable stock market investment and trading in the new year, get our INVEST 2017 TRADERS & INVESTORS SUMMIT home study pack for your guide in taking advantage of the next earnings season in 2017.
It is true that stocks are selling relatively at a low valuation now due to prolonged down market that was triggered by the exit of foreign investors in the market as result of falling oil prices and post-election uncertainties of the new government that created confidence crisis. But with the little improvement recorded in the Q3 GDP figures, despite still being negative, the contraction is reducing when you look at the change in Q1 GDP of -0.40, Q2 of -2.02 and Q3 of -2.24 which is a pointer that Q4 may likely be lower still to continue in a positive light especially as we expect the government to review and improve on its fiscal policies to boost productivity in the new year with the N7.3 trillion budget proposal for 2017.
Also it is expected that the CBN in the New Year should review its one-sided monetary policy in view of the need for greater collaboration in 2017 to save the nation from continued recession. The gradual return of foreign portfolio investors due to expected improvement in the nation’s reserve and implementation of the OPEC agreement in this first quarter of 2017. Also, it will boost government’s revenue and enhance implementation of the budget if passed earlier, given that the budget benchmark is $42.5 per barrel of oil, at a time it is already trading above $55.
In the New Year, investors should target stocks in the following industries: building material, construction, hospitality, energy, agriculture, financial and services that had suffered losses due to a bearish market that still has strong earnings power that can drive the price up again.
The global economy is likely to remain unstable, despite the expected increase in crude oil price in January as Britons prepare to exit the Eurozone and policy change in US by the new government which may likely redirect flow of funds.
Investors should be optimistic about the New Year as our comprehensive outlook for 2017 for publication next week and the outcome of the INVEST 2017 TRADERS & INVESTORS SUMMIT reveal a bullish signal for the year.
The chart below highlights the day change of the All Share Index for the entire year, with up days represented in green and down days in red. January march, May, June, July October, November and December were definitely the most volatile months of the year.
https://trwstockbrokers.wordpress.com/2017/01/02/2016-recap-and-2017-market-outlook/amp/
By Adedapo Adesanya
The Senate has passed a bill to repeal and re-enact the law establishing the National Insurance Commission (NAICOM), paving the way for the regulatory agency to be renamed the Insurance Regulatory Commission (IRC).
The legislation, titled the Insurance Regulatory Commission (Establishment) Bill, 2026, was passed after the Senate considered and adopted the report of its committee on banking, insurance and other financial institutions.
The Chairman of the committee, Mr Adetokunbo Abiru, the senator representing Lagos East, who presented the report, stated that the proposed legislation was necessary because the existing National Insurance Commission Act of 1997 had become outdated and no longer reflected the realities of Nigeria’s evolving insurance industry or global regulatory standards.
According to the Senate, the decision to change the Commission’s name was informed by the need to eliminate confusion associated with the existing designation and to better reflect the institution’s regulatory mandate within Nigeria’s insurance industry.
The bill also provides legal protection for the commission and its officers against adverse claims arising from the lawful execution of their statutory duties.
However, he noted that the commission’s enabling law had become obsolete, exposing significant regulatory gaps that required urgent legislative intervention.
‘The current National Insurance Commission Act 1997 is outdated and does not adequately address the emerging economic growth, needs and development of the insurance business,” the lawmaker said.
He explained that the new legislation seeks to strengthen the independence of the commission by empowering it to make regulatory decisions without undue influence in the country’s insurance sector.
According to him, the bill also enhances the commission’s authority to exchange information and collaborate with domestic and international regulatory bodies, issue regulations, guidelines, standards and directives on insurance-related matters, and intervene more effectively in financially distressed insurance companies to protect policyholders and preserve financial stability.
This marks yet another move to strengthen the country’s insurance sector following the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) of 2025 and the industry-wide recapitalisation exercise, which will wrap up by July 31.
By Adedapo Adesanya
About 143 companies that successfully passed the technical and prequalification stages of the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) 2025 Licensing Round will, today, compete for 50 oil and gas blocks at the commercial bid conference in Abuja, the final stage in the allocation process for the assets.
The commission said only the prequalified companies have been invited to attend the event, which will hold at the Conference Centre of the Transcorp Hilton Hotel, Abuja, stressing that participation is strictly by invitation.
The commercial bid conference will determine the successful bidders for oil and gas assets located across Nigeria’s producing and frontier basins.
The 50 blocks comprise 16 onshore blocks and 18 shallow water blocks in the Niger Delta, one deep offshore block, three onshore blocks in the Benin Basin, four in the Anambra Basin, four in the Chad Basin, and four in the Benue Trough.
According to the commission, the winning bids will be determined through a transparent evaluation process based on clearly defined commercial parameters. These include the signature bonus offered by bidders, the proposed work programme commitment and the level of performance security provided. The final selection will be based on a weighted technical and commercial score.
The licensing round is being conducted under the provisions of the Petroleum Industry Act (PIA) 2021, which requires a transparent and competitive process for the award of petroleum assets.
NUPRC had announced the commencement of the 2025 Licensing Round on November 11, 2025, before opening the online bid portal on December 1, 2025, to enable interested companies to register and participate in the exercise.
To ensure prospective investors fully understood the requirements, the commission organised a pre-bid conference on January 14, 2026, at Eko Hotels and Suites, Lagos. The event provided detailed explanations on the licensing guidelines and bidding procedures to registered participants and other stakeholders.
Registration and submission of prequalification documents closed on February 27, 2026, while the prequalification evaluation was completed on March 16, 2026.
NUPRC disclosed that 286 companies initially submitted applications for prequalification.
Following the evaluation process, 196 companies were cleared to participate in the technical and commercial bid stages.
The prequalified 143 companies eventually submitted a total of 200 bids for the available oil and gas blocks. These companies are now set to compete at the commercial bid conference, where the financial offers will be opened and evaluated to determine the eventual winners.
The licensing round is expected to attract fresh investment into Nigeria’s upstream petroleum sector, boost exploration activities across both producing and frontier basins, increase crude oil and gas reserves, and support the country’s drive to grow production and government revenue.
It also underscores the regulator’s commitment to implementing a transparent, competitive and investor-friendly licensing regime under the Petroleum Industry Act.
By Adedapo Adesanya
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has retained all key monetary policy parameters following the conclusion of its two-day meeting on July 21, 2026, on Tuesday, maintaining its tight monetary policy stance to curb inflation and support macroeconomic stability.
According to the Governor of the apex bank, Mr Yemi Cardoso, who chaired the committee, the Monetary Policy Rate (MPR), which serves as the benchmark interest rate, remains at 26.50 per cent. The MPC also retained the asymmetric corridor around the MPR at +50 basis points and -450 basis points.
In addition, the Cash Reserve Ratio (CRR) for commercial banks was left unchanged at 45.00 per cent, while the CRR for merchant banks remains at 16.00 per cent. The committee also retained the CRR on non-Treasury Single Account (Non-TSA) public sector deposits at 75.00 per cent, with the liquidity ratio at 30.00 per cent.
The decision reflects the apex bank’s continued commitment to containing inflationary pressures through a restrictive monetary policy while safeguarding the resilience of Nigeria’s financial system amid ongoing macroeconomic adjustments.
By keeping all policy tools unchanged, the MPC signalled its intention to continue managing excess liquidity in the banking sector and maintain stability in financial markets.
The move is also expected to provide greater policy certainty for investors and businesses monitoring the country’s monetary policy direction.
The latest decision also means borrowing costs are likely to remain elevated in the near term as the central bank continues to prioritise price stability over monetary easing.
Analysts had expected the CBN committee to retain the rate after Nigeria’s headline inflation came in at 15.91 per cent as of June 2026, marking a slight decline from 15.93 per cent in May.
However, even as overall price growth has moderated significantly compared to previous periods, food inflation remains a persistent challenge, accelerating to 17.52 per cent in June.
