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The Nigerian Stock Market has been much maligned for years, particularly since the crash of 2008/2009. A lot of Nigerians still have bad memories such that whenever you mention stock…they bail.

However, the stock market is still one of the most important markets Nigeria has. It is perhaps the oldest form of capitalism in Nigeria. If you want to have a peak into the future then just look at what the stock markets says or does. It’s more often than not the bellwether for economic boom or bust. Remember when oil price crashed began in 2014 and a lot of Nigerians didn’t know the implications? The stock market did already.

For example, as at July 2014 the stock market index was up 42, 832, the highest in about 5 years. By February when the oil price was already recording multi-year lows, the market was already down to as low as 29,000 points. Of course, Nigeria wasn’t in a recession then and the government had only just devalued.

We are still locked in the recession and no one really knows when we will get out of it. Not even the Vice President and his gun-ho “the recession will soon be history” remark can tell us when it will be over. But one data could do the trick.


The chart above shows just how pivotal the stock market is to gauging the boom and bust cycles of economies. The period between 2013 – 2014 was were we recorded the most foreign inflows. And as you can see, the inflows started drying up when oil prices started the drop. They didn’t even wait for us to announce the recession before drying up.

Nigeria’s recession like most of us now know is triggered by the huge depreciation in the value of the naira. Naira depreciation of course was triggered by the scarcity of dollars which was caused by the drop in foreign portfolio investments. I’m sure you catch the drift by now. And if you don’t here it is;

The Nigerian stock market is typically the first port of call for foreign investors looking to invest in Nigeria. Once they get the first signs that things could be better they start investing in equities again. So if you are looking for answers regarding when the recession might be ending, the look no further. Once FPI’s start to rise again then you know we are unto something good.

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