Stakeholders are reported to be reeling from what has been described as one of the worst years in the worldwide financial market. As a result of the inflation crisis, banks were forced to increase the interest rates, as well as halting the supply of cheap money. According to reports, the global stocks lost about a fifth of its value over the last year as a result of the surging inflation that preceded the pandemic and the Russia-Ukraine crisis. In fact, with the MSCI All-Country World Index of stocks losing one fifth of its value, Bloomberg described this crisis as a “$18tn rout”. Europe’s stock exchange for instance, depreciated by 12 percent last year, the continent’s worst recorded performance since 2018.
As inflation increased, shares were immensely affected. The tech and bond market were badly hit. However, the stock market has witnessed a major growth over the last two months, signaling the stock market’s resilience in spite of the numerous challenges faced, especially in Nigeria where the general election is expected to take place in days. Gbenga Ogunrinola, a Financial and Investment Analyst, revealed this whilst in an interview on the development trends existing in Nigeria’s stock market, as well as Africa’s and the global stock market with Tolulope Ogunjobi on Business Nigeria.
Climate of investment in Nigeria now dominated by local investors.
Mr. Ogunrinola, who was commenting from the United Kingdom, noted that the Nigerian Stock Market ended on a positive note in 2022 and commenced 2023 on a positive slate. He indicated that despite the impending general elections, the market’s value has continually surged. He revealed that since the advent of the Covid-19 pandemic, local investors had immensely participated in the market, making it quite an anomaly for foreign investors coming into the Nigerian market.
The Financial and Investment Analyst indicated that the trend had been very important in halting the dumping of stocks syndrome that commences at the beginning of elections in Nigeria. He insisted that the trend had helped the market and stock maintain their value. He explained that it was a good measure that the climate of investments was being dominated by local investors, as it would prompt more local investors. He also explained that the Nigerian local investments would make it cumbersome for local investors to move their money out of Nigeria to other countries.
Naira scarcity in Nigeria pushing people into cumbersome situations.
Speaking on the performance level of other countries like the United Kingdom, Mr. Ogunrinola further noted that most countries had raised their interest rates, as a result of the worrying situation of the global inflation. He said this measure was also aimed at ensuring no capital flight from their economy. He indicated that the markets within United Kingdom was over 10 percent and the market gain submitted at 6 percent. He again pointed out that indices in the United Kingdom had increased. In America however, the inflation rate was revealed at over 6 percent and that their interest rate is 4.5 percent.
It was indicated that the inflation rate in some developed countries were still high, as well as their interest rates. He encouraged the Central Bank of Nigeria and the coming president of Nigeria to ensure a reduction in the country’s inflation rate and interest rate, as they were still quite high. He also urged the necessary bodies to implement intentional policies that would positively impact the country’s economy. On the current scarcity of naira in the country, Mr. Ogunrinola explained that while it was a good initiative, the cost benefit analysis had evidently indicated that the policy was pushing the people into a cumbersome situation.
Global stock market predicted to witness improvements in 1st quarter.
He however urged the Central Bank of Nigeria to be open with the people, for better understanding of the current situation, whilst procuring viable solutions to curb the crisis before it degenerates. He also predicted that the global stock market would witness improvements in the first quarter and also develop further with a capital market recovery. It was also noted that with no further escalation of the Russia-Ukraine crisis, the global space would witness a decline in the inflation rate.