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Investors worry over apathy, illiquidity in stock market

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Stock Market

• Seek urgent unveiling of ministerial list, budget execution
The persistent apathy and illiquidity in Nigeria’s capital market is a source of worry for investors, as they urged President Muhammadu Buhari to urgently name his ministers and reactivate the market and overall economy.

Assessing market performance in the first half (H1) of 2019, as well as predicting its direction in this H2, the experts noted that although the bourse posted marginal increase in market capitalisation at the end of H1, but the appreciation may not be sustained.

They attributed this to government’s inability to implement other economic policies that would drive market recovery in a sustainable manner.

Specifically, they argued that the challenging business climate occasioned by insecurity and unfavourable government policies have constrained performance of the real sector, as well as weakened the purchasing power of the people.Furthermore, they argued that the failure of government to commence full implementation of the budget, and name the new ministers close to two months after inauguration has aggravated apathy in investment, especially by foreign investors and triggered a weak macroeconomic scenario.

For instance, the Chief Research Officer, Investdata Consulting Limited, Ambrose Omodion, said there is already a contention whether the President would send the ministerial list soon or repeat the same mistake of the past when he waited for six months to appoint ministers in his first term.

He argued that, “Without the appointment of ministers and full implementation of the budget, any CBN intervention measure cannot work for the market. For the first half of 2019, the market continued to oscillate because the numbers cannot support price movement.

“This is because there is no liquidity, and even if the numbers improved, the purchasing manager index for April, May, and June has been struggling especially in the real sector, which drives the economy; there are no activities so our GDP for the second half will be lower.He continued: “When inflation is up, the interest rate up as well, with dwindling economic activities, it is a sign of recession. The numbers from the real sector is low because of lack of purchasing power.

“The CBN alone cannot implement the budget, there are other activities needed for the economy to grow, such as the appointment of ministers and full implementation of the budget, without this, any CBN intervention measure cannot work for the market.”

The former Secretary-General, Independence Shareholders Association, Adebayo Adeleke, said: “Things have not picked up reasonably in the market. The elections are over, and still no economic blueprint from the government. No cabinet till now. It appears no one is responsible for the economic policies, so investors remain cautious. Also, the security situation is still a major challenge.”

The Managing Director, Highcap Securities, David Adonri, said: “The equities market depreciated in H1. Listing of MTN was the major event that occurred within the period. The Q2 results may have some salutary effects, but a weak macroeconomy may have negative impact on H2.”


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