The year began with the continued depreciation of the naira against the dollar and uncertainty around the direction of economic policies, which fueled an already prevalent bearish sentiment in the Nigerian capital market.

“Uncertainty and volatility dominate forecast for the New Year and beyond as Nigeria struggles with commodity price shocks and the resultant impact on the naira. This is also in the context of adjusting to new government policies targeting import substitution, inclusive growth (lower income focus), security, and eradicating corruption,” the Nigerian Stock Exchange (NSE) said in its outlook.

Nevertheless, the West African Exchange anticipates the return of investors who had remained on the sidelines throughout 2015.

This return is predicated upon return of investor confidence as a result of: effective implementation and communication of the government’s economic blueprint; credibility in monetary policy stance; relative stability in the macro economy (oil price stability above benchmark targets, increase in tax collection to GDP ratio, etc.); and improved security.

“The capital market has an opportunity to effectively finance the Federal Government of Nigeria’s (FGN) proposed budget deficit for 2016 and the implementation of its Medium Term Expenditure Framework (MTEF),” said the NSE.

“We anticipate 2016 to be a challenging year for the capital market and the domestic economy. We intend to continue our collaborative efforts with the new administration and other private sector players to create a framework for financing the Nation’s infrastructure and capital requirements,” the Exchange said.

Additionally, the Exchange plans to work with the FGN to ensure that the appropriate messaging is conveyed to the investor community.

The NSE believes that the current state of the market creates both challenges and opportunities for investors.

“We believe that taking a portfolio approach to investing provides the best risk adjusted alternative for participating in the capital market. As such, we want to ensure that the NSE provides a repertoire of products that will allow investors to create well diversified portfolios of uncorrelated asset classes,” the NSE said.

In 2016, the Nigerian Stock Exchange will focus on executing its strategy in order to continue to provide a credible platform for financing the economy.

“We intend to intensify engagement efforts with the FGN. We have also prioritized three initiatives for 2016 aimed at achieving the Exchange’s three strategic objectives of: 1) Increasing the number of new listings across five asset classes; 2) increasing order flow in the five asset classes; and operating a fair and orderly market based on just and equitable principles,” the NSE said.