…Urge govt to articulate policies to stimulate economic activities
With close to 25 per cent loss suffered by stock market investors due to free fall in equities prices in 2015, stakeholders in the nation’s capital market have urged the government to articulate policies that would trigger activities in the various segments of the economy and attract more listings in 2016.
The losses were calculated on start- up All-share index carried over to this year from 2014.
Indeed, the nation’ capital market has recorded unprecedented lull due to volatile foreign exchange and macro-economic concerns. Foreign portfolio flows to emerging markets turn negative. Spillover effect from China and fall in commodity prices were responsible for poor global equities market performance.
The market experienced sustained volatility as investors’ exited positions and speculators went bargain hunting.
Specifically, the market capitalisation of quoted equities, which opened the year at N11, 237 trillion as at January 5, 2015 now stand at N9, 553 trillion as at Wednesday, December 30, 2015 down by N1.684 trillion or 17.6 per cent in 12 months, while the All-share index slides by 6165.46 points or 22.2 per cent from 33,943.29 to 27,777.83.
The stakeholders, who spoke in a separate chat with The Guardian, maintained that government has addressed issues concerning the capital market with levity, noting that there was need to replicate the reforms witnessed in other sectors of the economy like the power, telecoms sector in the capital market.
According to them, government should articulate an integrated blueprint that would boost liquidity in the market and restore investors ‘confidence.
The Managing Director of NASD OTC Plc, Bola Ajomale urged the government to make policy decisions that would spur activities in the various segments in the stock market, especially the real sector.
Ajomale, who maintained that the uncertainties surrounding the economy presently are affecting recovery of the market, and pointed out that for the market to show a reasonable signs of recovery, government needed to put the right infrastructure in place to boost the real sector and make it more productive.
“A lot depends on policy and implementation. There is a lot of talk that foreign investors are waiting for devaluation before invest and that if they invest, the stocks will go up. If we can forget about devaluation and foreign investors for a minute or two and get the majority investors in the market empowered, make the real sector that underlines the capital market more productive and get the power to work.
“If government can get the infrastructure to work and boost the manufacturing base, it would reduce unemployment, which would increase disposable income. If this is done over the next quarter, the capital market will start responding.
“When we devaluate and foreign investors start coming, it means we do not have a solid market. It means that some portfolio investors are coming to take advantage of the market and the moment they exit, the market moves to square one. We have to get the underlining market strengthened and make the real sector productive.
The President, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu described the current state of the market as an unfortunate one.
He attributed the situation to over dependence on foreign investors while the local ones that are affected during the recession were being neglected.
“The market has lost about N2 trillion this year and it is losing this amount when there was that in the next two year, market capitalisation will hit N1 trillion.
“Despite the economic meltdown that hit the local investors, they are not being encouraged to increase their participation in the market, instead, they depend on foreign investors that when there is problem, they will offload their portfolio and that is why the market continue to slide.
“Foreign investors are favored more than Nigerians and they are not doing enough to educate local investors. A lot of Nigerians has burnt their fingers and they should mount campaign to tell people that the capital market is not a capitalist one but a platform for long-term investment. They have a lot to do in furthering the education of Nigerians in terms of capital market investment.” He said.
The National President, Constance Shareholders Association of Nigeria, Shehu Mallam Mikail who bemoaned the current state of the market, explained that the major factor responsible for the persistent lull in the market was government’s inability to come up with a clear blue print that would serve as a guide to both existing and prospective investors.
He argued that without a clear policy from government stating the direction of the economy for the next four years, all efforts by the regulators to stimulate activities and boost investors’ confidence in the market would remain a mirage.
“I pray that God will come to our rescue and heed to the cry of commoners. The people we put in position are not thinking of the generation unborn, talk more of the ageing ones like us.
“Without a clear blueprint, all efforts by regulators to boost confidence in the market, both the corporate governance score cards, the CRR and other incentives, instead, people would rather choose to save their money on their own.
“Stocks price are going down and some banks are laying off their workers .A lot of things are going wrong and these are the signals that are eroding investors’ confidence the more even with the incentives. We have all it takes to compete favorably in the global market but no good policies to drive these good cultures,” He added.
The President, Renaissance Shareholders Association of Nigeria, Ambassador Timothy Olufemi affirmed that the market has not made any significant improvement this year.
He attributed the reason to failure on the part of government to initiate policies that would spur economic activities.