Nigerian Stock Exchange has felt the burn of the oil price wars as it records its worst losses since the 37% drop of market value in March 2009. It lost market capitalization of N1.87 trillion in Q1,2020.
In March 2009, a 37% loss occurred, representing the largest quarterly drop for the Nigerian Stock Exchange. This took place after 2007, when a 45.7% drop was recorded in the markets.
Stocks experienced exponential losses. Market performance indices show a 0.14% drop. The month of March 2020 was exited with N10 billion in losses. The All-Share Index fell by 30.32 basis points (0.14%) from 21,330.79 the previous day to 21,300.47. Market capitalization of equities fell by N16bn to close at N11.1tn from N11.1tn.
Even before the oil price wars, Nigeria’s stock exchange performed relatively poorly. The Nigerian Stock Exchange started the century with 1,519% return in the decade ending 1999 during a time of military rule and relatively more robust stock market.
By the end of the decade, the stock market produced a decade to date return of 28.9%, a startlingly low figure which paints a picture of the race to the bottom in the stock market.
Meanwhile reports reveal that Bitcoin rose by 8.9 million percent since its creation. While the value of the cryptocurrency has experienced many turbulent periods, the tests of time have earned it a name as a contender among the most-favoured investment classes.
Many of the businesses listed on Nigeria’s stock exchange depend on traditional infrastructure which cryptocurrencies do not depend on for value appreciation. While stocks have fallen, bitcoin has led citizens of nations like Venezuela to economic freedom in times of great certainty.
Global events threaten the fiat of both big and small economies. Nations which have already faced major devaluations of their currencies have turned to digital currencies as a lifeline.