Shareholders wary of stock market recovery in 2017
…Hinge rebound on increased retail investors’ involvement
Two ’ groups; Progressive Shareholders Association of Nigeria (PSAN), and Standard Shareholders Association of Nigeria (SSAN), have bemoaned the huge losses suffered by investors in the last few years. They, therefore, urged regulators to work towards ensuring that the there is increased retail investors’ participation to enable the market to play its primary role in capital formation within the context of the nation’s economic development.
A retail investor is an individual who purchases securities for his or her own personal account rather than for an organisation. Retail investors typically trade in much smaller amounts than institutional investors such as mutual funds, pensions, or university endowments.
If there were increased retail investors’ participation in the stock market, the market would record some reasonable level of stability. This is because the retail investors, who invest on a long-term basis, will sell, take profit and reinvest in the market while the foreign ones will make profit and exit the market.
Specifically, the National Coordinator, PSAN, Boniface Okezie, who spoke in a telephone interview with The Guardian, argued that the initiatives put in place so far by the regulators to turn around the fortunes of the market has not reflected on the share prices of equities, especially the penny stocks.
He pointed out that unless the regulators focused attention on retail investors, who, according to him, are the real owners of the market rather than the foreigners, the lull in market would persist.
Okezie explained that retail investor’s apathy in the market became stronger upon the takeover of the three banks (Afribank, Bank PHB and Spring Bank) in 2011, adding that retail investors are yet to recover from the losses incurred on the investment. He further noted that the stock market has been on a nosedive trend prior to the macro economic issues bedevilling the nation since after the 2015 election.
He urged regulators to channel their resources toward attracting domestic investors to the market, adding that the regulators are in position to develop the market and protect it against the level of volatility currently being witnessed.
“Where is the world-class market, why are the initiatives not reflecting on the share prices? If they want the market to be sustained, they should look inwards. They have been travelling abroad looking for foreign investors and where are they today? They have made their gain and exited the market. The presence of foreigners in the market, without the retail investors cannot revive the market.
“Retail investors are long-term investors that will sustain the market. They are the ones that can make the market thick, they do not offload but they sell when they want to make both ends meet. If we rely on foreign investors, we cannot build the market. They will buy today; make gain, offload and exit the market tomorrow.
“The market should have improved by now but Nigerians are aggrieved and because the retail investors make the market, the market cannot rebound with their exit in the market.”
Similarly, the President, SSAN, Godwin Anono, submitted that the regulators need to initiate favourable policies that would stir and sustain activities in both primary and secondary market segments in order to reverse the trend.
Anono explained that the Nigerian Stock Exchange listing requirements needed to be reviewed further, especially in the areas of operational charges to attract more companies and retail investors.
”People are not showing interest in the stock market anymore. They are no longer buying shares. It is only when the penny stocks start appreciating then one can say the market is improving.
“Many insurance companies are not declaring dividend. When out of 10 companies, only few declare dividend, people will hold back their money. NSE has not initiated policies that would encourage investors like in charges,” he said.