Rebound in Nigeria's Stock Market is Up in the Air.

admatt30@yahoo.com

 

Now and even later when the global meltdown is over, our stock market may not recover much of what it has lost.  The necessary ingredients- diversification and volume- of efficient market seem to be thinning out.  Importing industry seems to be at the cusp of boom, if it has not been there.

 

Our economy hinges on the up and down of price of crude oil.  Because of our high-grade oil, commodity future price dances to the tune from the oil-rich South-south often.  But that will not be for long.  The resurgence of energy awareness is charting the pathway of decreasing usage of crude oil as the basal fuel of world economy.  Even if the mental buffer has yet to make a serious dent, the physical one is already stabilising fluctuation in price.  Floating storage- excess tanker ships- of cheap oil off the U.S. coastline in the Gulf of Mexico empties its content for domestic market whenever the price is deemed too high.  The same fills up at low price.  The future of oil is being threatened by renewable energy.  We might as well take the heightened research into the energy as a sort of early warning.

 

By far the failure to maintain adequate supply of electricity nationwide puts in the opposition to the worldwide mantra for lower consumption of crude oil.  Our refineries are yet to meet just the transportation demand at home.  The unmet demand of others sectors is ripe to be exploited by importers.  Regardless of moral implication of lobbying against attempts to boost production at home, flexing their political muscle is in their own best interest so far as it is done lawfully.  Who can blame them?  The cruel wheel of free market works with the lubrication from democracy through legal campaign contributions.  Consumption of imported petrol and its allied products is skyrocketing with mushrooming electricity generators.  Had there been a stead and reliable electricity supply, there would have been very low demand for generators and small engines in mostly urban areas. Today's comfortable living depends on electricity for every inch. 

 

For the comfortable living to be realised, cheap made-in-China products are must-haves.  Again, importers are as necessary as ever.  Home-grown manufacturers are things of pipe dream.  China is the undisputed manufacturing floor of world as it is.  So the import industry seems to be the only stock for the smart money.  Behind this industry is the service-providers one.  Third in rank is finance industry regardless of its recent poor performance.  Even in our cash-and-carry economy, some sort of high-end financing is needed to move goods across the international borders.

 

To secure your comfortable living, the faith-based industry is in the business of blessing and putting protective hedges around you and your love ones.  Although the industry is the green elephant in the upper crust’s living rooms, but it is yet to be included in our national GNP in spite of its growth rate and influential position.  The question is how do you buy stock in this fastest growing industry in Nigeria ?  Until that is answered, it ought to be number four. 

     

As for now, the fact that our economy is pegged to U.S. dollar is not automatic route for rebound in our lukewarm stock market.  What the U.S. market is actually experiencing is not a natural momentum-driver but a decrease in the differential rate of downswing due economic stimulus.  The efficacy of which is questionable to some degree because there is no surety of up bound forever without unexpected dips now and then.

 

The upswing pressure has to reach a sustainable one to have a significant bearing on ours, a far-off downstream economy of the mighty current of  U.S. market.  Just as much as distance, tributary rivers, and the nature of terrain determine the relative speed of water-flow downstream so are they applicable in the recovery of our stock market.  For distance replaces with the quantity, tributary rivers insert influential activity; and the nature of terrain thinks of middle market between U.S. and ours.

 

With the quantity, we are just a short-lived blip on the radar of the U.S. market, a vast ocean of activities.  Its directional point of change is beyond our influence when the price of crude oil is neither too low nor high such as in the last quarter of 2008.  Between U.S. and ours,  London is still a middle market to reckon with even in this nanosecond age.