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Investors blame market woes on government policies


The NSE All-share and NSE-30 Indices as at September 23rd, 2016

The NSE All-share and NSE-30 Indices as at September 23rd, 2016

Capital market stakeholders have bemoaned government economic policies, especially the recent decision by the Central Bank of Nigeria (CBN) to retain interest rate at 14 per cent, They said that the policy was disincentive to investment for both foreign and indigenous investors.

They argued that when interest rate is low, speculators move their funds from the money market instruments to the stock market to make a kill.

The same speculators, according to them, also move from the stock market to other asset classes, especially, fixed income securities when the interest rate is high.

Specifically, the Managing Director of Highcap Securities Limited, David Adonri explained that Nigeria is currently in recession because the fiscal authorities have failed to initiate policies that would boost the supply side of the economy.

This, according to him, is affecting the real sector, especially in the production of goods and services, which is having a multiplier effect on the stock market.

“If the supply side is not working, there would be scarcity which is adversely affecting the stock market. The circular in flow of money presently is affecting the equities market.”

The Managing Director of Renaissance Shareholders Association of Nigeria, Timothy Olufemi said: “Government policies are always detrimental to investors. Retaining Interest rate at 14 percent would attract investment to the money market and make the capital market less attractive which would further depress the market.”

The National President Constance Shareholders’ Association of Nigeria, Shehu Mallam Mikail explained that government policies are hitting hard in the stock market. The interest rate has made the equities market less attractive as investors are currently approaching the money market to increase their portfolio.

He explained that most listed companies that needed capital to boost their operations; especially those that are already diversifying into other sectors can not approach the banks due to high interest margin.

“Banks also are not ready to give loans to listed companies. Government should adopt a policy that would create a better avenue to improve the economy so that our capital market would rebound while investors get good  returns on their investment.”

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