Stakeholders link sustainable market rebound to infrastructure funding
.Reinforces inclusive growth initiatives to restore investors’
With close to 38 per cent loss suffered investors due to free fall in equity prices in 2018, stakeholders have urged President Muhammadu Buhari to use his second term to prioritise the stock market as the most reliable medium to finance critical infrastructure.Dearth of infrastructure is routinely identified as the bane of doing business in Nigeria.
Stakeholders, who spoke in a chat with The Guardian on their expectations from the incumbent administration, said there is an urgent need to articulate policies that would boost liquidity in the market, and restore investors’ confidence.They also bemoaned the unprecedented lull that had besieged the market in the past few months, urging government to create new strategic initiatives that would reverse the weak macroeconomic scenario, and boost yield in the nation’s bourse across all segments.
Furthermore, they argued that Nigeria’s growth model needed a rethink, and tasked government on inclusiveness to restore the economy on the path of sustainable growth and enhance investors’ confidence.
A stockbroker and the Managing Director, Sofunix Investment and Communication Limited, Sola Oni, said the new administration must urgently revive the economy and initiate policies that would help build investors’ confidence in the capital market.“The announcement has put an end to an unusual waiting period for the final (election) results. Regardless of the party that forms the government at any point in time, the critical issue is the economy in general, and the financial market in particular.
“Any government that manages macroeconomic challenges will ultimately win the heart of the people. The most important thing that any government can do to build investors’ confidence in the capital market is to fix the economy. He continued: “The economy is the underlying asset, while the financial market, which comprises both money, and capital market is a derivative. The stock market simply mirrors the economy. The economy shall be fixed if the enabling environment is created.
“The environment requires infrastructure such as power, road network, airways, waterways, security of lives and property, sanctity of contracts, and a host of others.
At the very basic level, quoted companies need to operate optimally in order to deliver shareholder value. The value shall also encourage demand for shares and request for new listing,“ he added.
An independent investor, Amaechi Egbo, said the new administration must leverage the huge potential of the capital market to grow the economy, as the market provides a variety of financing instruments and investor categories, which could lead to larger pool of funds than other financing options.
According to him, the capital market is a critical pillar to long-term fund mobilisation needed for capital formation to fast track economic growth and development in the country, while also providing securities, where companies and governments can raise long term funds.
The National Coordinator, Progressive Shareholders Association, Boniface Okezie, said: “He (President) should as a matter of urgency, appoint Chairman for the Securities and Exchange Commission (SEC), and constitute the board at once without further delay; it is more than over due for years. If an apex market regulator has no board, how can they effectively create rules that will govern the market for proper growth?
“There is also need for him to order investigations into the failed banks, and how money recovered from the promoters of those banks was utilised. Also, investigate those that acquired the banks and the cost of the acquisition. He needs to institute inquiries into all of these in order to restore investors’ confidence.”
The Chief Research Officer, Investdata Consulting Limited, Ambrose Omordion, said: “The first half will see politics and electioneering dominating to the detriment of economic activities, which may translate into muted capital inflow, increased pressure on the naira, accelerated foreign exchange (FX) intervention, and declining external reserves.
“We expect some level of normalcy to return in the second half of the year, translating to strengthened investors’ confidence, increased capital flows, softened pressure on the naira, and decreasing yields on government securities as well as the likelihood of increased inflationary pressure.”
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