- I lost over N20m worth of shares— Investor
- Investors’ education is key – Shareholder
Some local investors in the nation’s capital market have expressed displeasure over the dwindling performance of the stock market, saying they have lost millions of naira so far.
Some of the investors who spoke to The Point in separate encounters range from petty traders, corporate individuals to students who bought shares through Right Issues and or Initial Public Offerings in the past.
Investors narrate their ordeal
Narrating their experience, many of the local investors said they invested heavily on shares with the hope to get returns on investment.
A mechanical engineer at Apapa Wharf, Mr. Charles Ayobami, said; “My sister, I must tell you the truth. I lost money because of the bad performance of the capital market. I lost over N20 million in all. My father was a teacher, he taught us how to invest in stock with the hope to save for old age. But fraud and other market infractions made me to lose money and I regret ever putting my money in stocks.”
For Mrs. Stellar Ashaolu, it was a different ball game.
“There was a time, about ten years back, when buying of shares were in vogue. Selling of stocks was like a competition among all the banks. That was the time I put all my money in the stock market. I don’t even have a stockbroker; I was just buying because I saw that everyone was buying. As I speak with you now, I don’t know the whereabouts of all the shares or how to locate them,” she said.
On his part, a regional head of a bank, who wouldn’t want his name mentioned, said, “The drive to invest in the stock market is no longer as it used to be. A lot of people have actually developed phobia investing in the stock market. There are lots of infractions out there that investors may really not understand. As for me, I’m done with stock investment. I’d rather prefer investment in real estate.”
A critical examination of the market performance indicated that about 32 per cent of potential investors don’t understand the stock market enough to feel confident to invest whilst nearly a quarter (24 per cent) are put off by stock market investment as they simply don’t know how to go about it.
Analysts and capital market observers, however, believe that investors’ confidence in no small measure dictates the extent to which any stock market can go. They are also of the opinion that while the market eagerly awaits investors’ return, regulators must make efforts to educate investors so as to allow the stock market to return to where it used to be
Everybody is crying about the stock market, most of them do not really understand market situations. But for some of us who have been in the market, it is time for us to buy those stocks we want in our portfolio that we do not have
They revealed that potential investors are more deterred from stock market investment because of lack of understanding than fear of the risks involved.
SEC assures of better days ahead
Even with the gloomy pictures painted by the investors who lost money, the Acting Director General of the Securities and Exchange Commission, Ms. Mary Uduk, insisted that the Nigerian stock market is very strong, saying the current challenges being experienced are just a temporary thing which will normalise after the 2019 elections.
“We do not take our foreign investors for granted, especially in terms of transparency and the liquidity they bring to the market. We are also very particular about our domestic investors which are the foundation of the market, that when foreign investors leave, they are the ones that stay here with us in the market. There are certain initiatives that we have come up with to build confidence and encourage their participation, one of which is zero tolerance for market infraction,” the SEC Director General said.
Shareholders’ perspective
The immediate National Coordinator, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu, advised prospective investors to have proper knowledge of the stock market before venturing into it.
“I can tell you that members of ISAN are fully aware of the dynamics of the stock market. We organise seminar to further educate our members on how to play in the market. You are aware that recently we put together a national workshop on share buyback. The minister of finance and director general of the Securities and Exchange Commission attended,” he said.
Speaking on panic sale and fear by investors to return to the stock market, he said that ISAN members would rather buy at this time than sell.
“If you have been attending Annual General Meetings in recent times, you will understand me better. I always tell shareholders who are long term players like us not to panic because we not only get our return through capital appreciation but through bonus and dividend and they understood my point,” he stated.
National President of Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, believes that market regulators should do more on investors education to help re-orientate investors.
“Everybody is crying about the stock market, most of them do not really understand market situations. But for some of us who have been in the market, it is time for us to buy those stocks we want in our portfolio that we do not have. This is why I say it every day that we will never support share buy back,” he stressed.
Okezie said: “If share prices are falling naturally, they are crying. What happens when you buy back their shares in a manner they do not understand? You see, this market is not like what you have abroad. They are very knowledgeable about the workings of the stock market over there. But here, when did we start? As a matter of fact, it is the banking consolidation that brought many people to the market. So investors’ education is very important because a lot of them are misinformed.”
According to Okezie, the Nigerian capital market is not ripe enough for issues such as interventions and share buy back as a means of driving investors’ confidence.
“That is why the market is not responding to these measures. In the Nigerian system, a lot of things are still being manipulated, we are not ripe for share buyback and all these things they are talking about. For example, if a company is buying back its shares, where are they going to get the money from?
“They can do it without recourse to shareholders because they are buying back, they will not tell you from which money, either from the shareholders fund or capital reserve. We do not understand these issues here,” he
said.
Okezie added that one of the issues all relevant institutions in the capital market must address is the need to come up with revised, effective and enforceable corporate governance policies for all companies operating in Nigeria.
This, he stressed, will assure both local and foreign investors that the business environment in the country is safe and transparent.
“It will also prevent imminent financial crisis as experienced in Asia and Greece sometime ago. The issue cannot and must not be unduly delayed because of the dangers and catastrophes it will have on our financial market.
“With so many local and foreign investors continuing to participate in the Nigerian capital market and committing more of their hard-earned money in our care, they are depending on regulators everyday to make sure that their investments remain safe, sound and accessible,” he
said.
