THE year 2009 is a year that will forever remain in the history of the Nigerian capital market for so many reasons. The real meltdown which started in 2008 came fully in the year 2009 and almost all of the sectors were affected. By the end of January 2009, the All Share Index lost 31 per cent of its value which has never happened in the history of the Nigerian capital market, and that singular act really dampened the confidence of the investors.
Also the year would remain unforgettable because of what happened in the month of May 2009 when the All Share Index gained 34 per cent. This confirmed that the Nigerian economy in particular can give you a surprise any time any day. The market gained more than what was lost in January. If not because of the banking reform, the market would have started celebrating its recovery just as it happened in the New York Stock Exchange and the London Stock Exchange.
However, the banking reform which the new governor of the Central Bank of Nigeria (CBN) started at the second half of the year returned the bear into the market which was witnessed up till the end of the year. By the end of the year the All Share Index may not be less than 21,000 from 31,000, that is a loss of over 30 per cent.
However, despite this, some sectors within the market proved that they were not only stable but they even grew their share prices sectors like the food and beverages and building materials.
Looking at the building materials sector, they all gained compared to what they started the year with. The same thing with the food and beverages sector where there have been fantastic results and we are envisaging that if this continues in 2010, this particular sector would be one of the darling sectors for the investors.
The banking sector was the worst hit in the year, because quite a number of the banks especially the banks that were bailed out by the CBN declared huge losses due to the provisions they had to make which were unprecedented in the history of the banking sector. A situation where the entire shareholders fund become negative and losses of over N100 billion above the shareholders fund reflected in their prices, most of these banks lost between 70 to 90 per cent of their opening price at January 2009.
However the very few that ensured corporate governance and were prudent in their management and were conscious of risk management, such as Guaranty Trust Bank and the FCMB, their year end price was higher than their opening price in January. So we can say that even though over 80 per cent of the financial recorded serious losses, few of them were above board.
However that was not the case with the insurance sector, even though the reform had not reached the sector, the sector was a loss sector for the year 2009. Most of the stocks recorded heavy losses, with a substantial number of the insurance companies at the mercy of par value, selling at N0.50 per share because they can’t go lower than that otherwise they would be selling lower than that.
Another sector that did not do well is the aviation sector. Despite the boom in the aviation industry, the sector did not do well in 2009. The agricultural sector did not also do well in 2009 and the information and communication technology sector also performed very poorly, infact all the companies listed there lost as much as 90 per cent.
The year 2010 we believe is the year for recovery, and the loss incurred by the market in 2008 and 2009 ought to be regained at the end of 2010.
The incorporation of the Asset Management Company by the CBN in order to mop the toxic assets with an initial provision of N250 billion which could be increased to N1 trillion, is a plus to the market. A lot of excess shares in the market will be moped up and the share prices would start rising.
The petroleum reform bill which the National Assembly has promised to pass into law to speed up the deregulation of the oil sector is also a plus. There is no doubt this will bring a change to the oil sector of the Nigerian Stock Exchange.
Another sector that would be expected to make a tremendous recovery and serious impact on the capital market is the banking sector. This is because of all the provisions actual and potential were provided in their 2009. Most of these banks have made huge recovery which would reflect in their 2010 financial year, it is expected that most of them will record profits in the first quarter of the year. This would restore confidence and investors would come rushing into the market.
Not only that, the uncertainty that surrounds  most of the quoted stocks particularly banking stocks will fade and we envisage that foreign investors are likely going to run back to the Nigerian market to take position.
Another sector that has a good growth potential is the food and beverages sector. With the results being posted by some companies in the sector, there is no doubt that the sector has something to offer to the industry. The breweries and building materials sectors are also expected to make tremendous recoveries during 2010 and with more subsidy and the investments made by the federal government in agriculture we are also expecting some recovery in the agriculture sector.
The insurance sector may also indirectly benefit from what is happening in other sectors. So the year 2009 is the year of hope and recovery, and investors should carefully look at these and make their good selections.