Investors and some capital market operators have called on the Federal Government to be more proactive in ensuring the rebound of the nation’s capital market.
They warned that for the projected economic growth envisioned by the President Muhammadu Buhari administration to be realised, it was imperative to get the capital market back to its desirable heights.
According to them, the market which had seen over N20 trillion in wealth, evaporated with the retail investor-group leaving the market struggling under illiquidity, lack of depth and disconnect with the economy.
Head, Investment and Research, Sterling Capital, Sewa Wusu, said a combination of factors has actually been affecting the Nigerian economy and that there had been reactions in the financial markets generally.
“They are headwinds that investors would naturally react to because of the fear of eroding the value of their investment. Most investors are just exiting to preserve their capital and wait for the tide to clear, because they cannot just make investment decisions when there is no clarity in the macroeconomic space.”
When asked why local investors failed to take advantage of the exit of foreign investors, the Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, explained, “If you look at the portfolio of the pension funds administrators, you will see that they are getting underweight in equities; they are shifting much more of their funds to Federal Government’s treasury bills and bonds, which simply means that they have more faith in the fact that interest rates would go up further. We are in an economy where because of unclear economic policies, you cannot say that equity prices will
rally.”
Responding in a telephone interview, Managing Director, APT Securities and Funds Limited, Malam Garba Kurfi, said lack of policy direction of the government had affected the entire system, including the capital market.
“Foreign investors who are the major players in the market normally analyse the economic policy statement to be able to predict the likely result, before they invest their funds. The new trading guideline as regards per value share also brings some stocks like WAPIC and ABC Transport into such bracket.”
A stock analyst with Golden Securities Limited, Mr. Tunde Oyediran, also said the first and second quarter of the year is always marred with bearish market situation. “It is usually caused by low expectation within the period, which culminate in low patronage by both local and foreign investors. This is because of the festive period and the electioneering year.
Oyediran stated that market in the last quarter of the year will be upswing, as levels of activities will increase in volume and values, saying that the major factor that will trigger this performance is increased expectation for better third quarter and end of the year results.
Reacting to the market fundamentals, the Managing Director/Chief Executive Officer of the NSE, Mr. Oscar Onyema, is optimistic that the capital market would recover before the end of 2018. According to him, the effect of the reforms on the sector and the various products put in place by the regulator will energise the market to rebound,
“With government’s support system, vibrancy would be restored to the market. I have no doubt that we have a great future. The Nigerian capital market will in the very near future be the toast of investors.”
He assured investors that the council and the management team of the NSE would continue to carry out market reforms to champion the acceleration of Nigeria’s and Africa’s economic development, adding that a vibrant capital market is a key to economic growth in any country.
Meanwhile, the Minister of Finance, Mrs. Kemi Adeosun, led by the Chairman of Capital Market Master Plan Council in Abuja, said the capital market had the potentials to solve most of the nation’s financial problems, and promised that the government would leverage on the opportunity to harness the potentials.
Adeosun said Nigeria needed funds to finance various sectors of the economy and the capital market was the strength needed to support the government.
