‘Failure of multinationals listing on NSE limits market competitiveness among peers’
Failure of the multinationals in telecoms and oil and gas sectors listing on the Nigerian Stock Exchange (NSE), has constrained the scope and depth of the Nigerian capital market (NCM), limiting its competitiveness among the peers.
The former Speaker of the Federal House of Representatives, Dimeji Bankole, who made the submission at the Gala Night for the 20th Annual Conference of the Chartered Institute of Stockbrokers (CIS) in Lagos, explained that the market cannot represent the economy if the big corporations operating in Nigeria are not publicly quoted.
Indeed, many sectors of the economy are not well represented, making the performance of the stock market not to reflect the state of the nation’s economy.
The telecommunications and oil and gas sectors are narrowly represented in the market. Big companies operating in those sectors, even in the industrial sector, are yet to list on the NSE)
Bankole pointed out that the market must strategise for economic growth to enable it facilitate capital raising and mobilise savings for huge projects and investment.
He added that capital market regulators and government need to be on top of their responsibilities in order to boost investors’ confidence in the market. He added that most of these Nigerians contribute to the revenue and profit of those companies through their patronage.
Furthermore, he explained that as a platform for capital formation and distribution of wealth, the non-listing of major companies has been denying many Nigerian investors the opportunity to share from the profits of those companies.
He explained that the problem is endemic, not just limited to one sector, adding that the stock market is in need of a broader variety of stock options, the same way that the Nigerian economy is in dire need of complexity.
“Examples of the corporations not reflected in the capital market, include major companies in the telecoms sector like MTN, Globacom, Airtel; DISCOs and GENCOs in the Electric Power Sector; NNPC, LNG, petrochemicals, Shell and major upstream energy companies.”
The former Speaker noted that the absence of these entities from the capital market, has constrained the scope and depth of the market and by so doing, the market’s capacity to serve as credible investment outlet.
“This needs to be changed, shallowness of the Capital Market was a major reason for the asset bubble in 2007/2008 that caused the near collapse of the market. The asset bubble arose from over concentration of financial assets in few viable equities, amidst an unprecedented credit boom in the economy.”
He suggested, that Nigeria must develop a sound capital market with high absorptive capacity as seen across developed economies.“We need economic complexity, this means that the Government and economic regulators need to compel all major enterprises in the economy to list their shares in the capital market.
“These major companies make a lot of revenue from the labour of Nigerians, who are unable to hold stake and share in their wealth.”He added that without the checks and balances inherent in the capital market system, there are increased opportunities for corruption and socially irresponsible behavior.
“In 2008, Nigerians willingly borrowed money from banks to invest in the stock market and when the market bust, innocent Nigerians were left to pick up the pieces and there’s very little that can be said today to convince them to bring their hard-earned wages to the market.”
Bankole pointed out that the Nigerian stock market cannot thrive without the backing and support of the Nigerian people.“And to renew the confidence of Nigerians in the stock market the regulatory agency must ensure its own visibility and transparency within the market. It must be seen as a credible authority with legitimacy and power to act. Boosting domestic investor confidence will send signals to the market that will attract foreign investors,” he added.
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1 Comments
Mr bankole when did you become the director of the stock exchange? Is the stock exchange affecting your loot from NASS?
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