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Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, has said that Nigerian banking stocks were the worst performing stocks in 2015.

While giving a review on the performance of the NSE in 2015 and its outlook for 2016 on Thursday, Onyema said that banking stocks were most affected by widespread bearish sentiments caused by declining oil prices, the depreciation of the naira against the dollar, and sustained uncertainty during the general elections last year.

“The NSE banking index was the worst hit in 2015, plunging by 23.6 percent,” Onyema said.

The woeful performance of Nigerian banking stocks occurred despite the positive financial results reported by most banks last year. For instance, the three biggest banks – Zenith Bank, First Bank and Guaranty Trust Bank – reported higher year-on-year growth in revenues and profits in each of their results for the nine months period ending on September 30, 2015.

“A few things that happened in that sector like changes in foreign exchange and commissions on turnover (COT) may have caused investors to selloff their banking holdings,” Onyema said.

The NSE’s benchmark stock index – the All Share Index – fell by 17.4 percent in 2015 as a result of the same declining fundamentals.

On his outlook for the capital market in 2016, Onyema said the NSE is poised to play a leading role in financing the economy, especially the federal government’s 2016 budget deficit estimated to be about N2.2 trillion.

“With greater clarity in policy direction, we anticipate the return of investors who had remained on the sidelines throughout 2015,” Onyema said.

Foreign investors accounted for 54.24 percent of turnover in 2015 while local investors accounted for 45.75 percent.

According to Onyema, the NSE’s bond market was bullish in 2015 as more companies, mostly from the financial services sector, tapped the market to raise relatively cheaper financing. The bond market rose by 32.7 percent in 2015 to close at N7.14 trillion.
 
Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst