Experts advocate incentives to encourage listing on NGX
Capital market experts have urged the Federal Government to roll out more incentives for entities ready to approach the Nigerian Exchange Limited (NGX) for listing.
Specifically, a Professor of Capital Market Studies, Nasarawa State University and President, Association of Capital Market Academics of Nigeria, Uche Uwaleke said the government has a role to play in ensuring that more companies are listed on the nation’s bourse to create wealth and give Nigerians the opportunity to benefit from profitable entities.
He pointed out that there is a need for the government to speed up privatisation of assets slated for the exercise and ensure that these entities are infused into share purchase agreements to be listed within a given period.
Furthermore, he also urged market stakeholders to step up advocacy on the benefits of listing on the nation’s bourse.
Also identifying factors that would determine the performance of the stock market in 2022, Uwaleke said the planned interest rate normalisation in developed economies is likely to impact the Nigerian economy including the stock market in 2022.
According to him, this would result in a rise in bond yields leading to capital flow reversals in Nigeria and other frontier markets.
“So, Nigeria should expect further capital outflows as a consequence which will hurt the stock market. Also, it goes without saying that the exit of foreign investors usually puts pressure on the forex market.
“Therefore, another likely implication is the depletion of foreign reserves and a higher exchange rate to the naira providing further justification for the CBN to tighten monetary policy.
The University Don advised that both the fiscal and monetary authorities should anticipate the fallout of interest rate normalisation in developed economies and put in place measures to cushion the adverse impact on the Nigerian economy.
In addition, Uwaleke said heightened political activity is another endogenous factor likely to determine market performance this year.
According to him, this will have adverse consequences for the economy and the stock market due to uncertainties and tensions often generated by the activities of some desperate Politicians.
“Inflationary pressure and exchange rate challenge will likely manifest more in the 2nd half of 2022 as politics takes center stage,” he added.
President/Chairman of the Chartered Institute of Stockbrokers, Olatunde Amolegbe said the government has a role to play in terms of maximising the benefits of the exercise in terms of sustainable economic growth and wealth creation.
He cited the indigenisation and privatisation policy of 1976 when the stock market grew exponentially due to the government’s decision to speed up privatisation exercise and bring the entities to the market during the period.
Amolegbe pointed out that sustained growth and expansion of the nation’s employment space would remain elusive without making privatisation an all-inclusive programme.
He insisted that experiences from successful privatisation exercises in other countries provided their citizen’s opportunities to benefit from the transformation of the commonwealth of the enterprises.