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Investors seek government’s intervention as indices plunge by N100 billion

By Helen Oji
16 January 2017   |   4:20 am
Investors, at the weekend, renewed the call for Federal Government to make deliberate pronouncements that would stimulate economic activities and accelerate sustainable stock market recovery.
 Nigeria Stock Exchange, Lagos

Nigeria Stock Exchange, Lagos

Investors, at the weekend, renewed the call for Federal Government to make deliberate pronouncements that would stimulate economic activities and accelerate sustainable stock market recovery.

The shareholders, who lamented the free fall of equities’ prices, argued that since the economic meltdown that hit the local investors, the market has not recorded any significant level of improvement, rather, retail investors have continued to lose their investment in equities.

The free fall of equities is a major disincentive to prospective local and foreign investors, and further erodes confidence in the Nigerian market.Indeed, it is important for the government to take decisive steps towards improving the lot of the market to enable the country take its rightful position as an investment destination. Furthermore, the equities market of any economy is beneficial to the economy because it assists in creating wealth and employment.

With over N100 billion losses already incurred by investors from Tuesday, January 3rd, when the market reopened for the year to last week Friday, they noted that concerted efforts geared at forestalling further loss of investment in the market must be made.

Specifically, the market capitalisation of the Nigerian Stock Exchange, which opened the year at N9,158 trillion on January 3, 2017, depreciated by N100 billion or 1.1 per cent, to close at N9.058 trillion on Friday. The All-share index suffered the same fate, as it declined by 290.96 points from 26,616.89 to 26,325.93.

While the equities market has been in decline, financial assets have continued to migrate massively to the debt (fixed income) marketWith low yield on equities and abnormally high yield on debt securities, the financial market has been thrown into a state of imbalance.

Reacting to the development, an independent investor, Amaechi Egbo, said the market would not record any reasonable improvement this year unless government tackled some market impediments; especially the issue of infrastructure, which he said, is vital to economic growth.

Egbo, who spoke in a telephone interview with The Guardian, pointed out that the problem of insecurity, should be addressed, noting that Nigeria cannot witness the inflow of foreign direct investment if security of lives and properties are not guaranteed.

“Government should resolve the myriad of security related problems and reassure portfolio managers on safety of lives and investment. Government should improve the state of infrastructure.

“This would help both listed companies and others achieve healthier bottom-line. Critical to improving the stock market is for economic managers to remove distortions in the forex market and prioritise companies’ access to forex for production.

He added: “The market can improve in 2017 if the regulators would create more incentives and reward for performance while government agencies would strive to eliminate multiple taxation.”

The Managing Director of Crane Securities, Mike Ezeh, attributed the persistent lull in the market to investors’ apathy and loss of confidence. “Massive enlightenment seminars and conferences should be embarked on by regulators to enlighten the investors on the rudiment of stock investment.

He however lamented neglect on the market, stressing the need for government to support and participate on the market.“Government particularly which should be the biggest participant pretends to be ignorant of the enormous importance on of bourse to economic development.”

The National President, Constance Shareholders Association of Nigeria, Shehu Mallam Mikail, affirmed that the market would not make any significant improvement this year if pragmatic decisions and actions that would stimulate the economy are not taken.

“The market since May 2015, has not made any significant improvement because federal government has failed to act, while economic activities are still zero. Lack of liquidity, no money in the economy and there is no money for savings. No economic activities to even bring foreign investors.

“Federal Government should come out and stimulate the economy to stir market activities and put liquidity into the economy so that people can have extra income. There are no buyers for even those that wanted to sell off their shares,” he said

At the close of transactions on Friday, 20 stocks appreciated in price, against 24 others that constituted the losers’ chart.Precisely, Mobil Oil emerged the day’s highest price loser with five per cent to close at N249.86 per share, while Julius Berger followed with 4.99 per cent to close at N4.99 per share.

Cutix and UAC-Property lost 4.91 per cent to close at N1.55 and N2.71 per share respectively. Presco shed 4.59 per cent to close at N42.16 per share. Nigerian Aviation Handling Company depreciated by 4.29 per cent to close at N2.68 per share.