Saturday, December 29, 2012

Nigeria’s capital market in 2012: Still below average

WorldStage Newsonline (EXCLUSIVE)-- As 2012 draws to an end, experts believed that the Nigerian Capital market did not do enough to meet investors’ expectation. NKECHI NAECHE reports.
The Nigerian capital market is something of an enigma. The year 2012, to many investors has not yielded good result due to the problems of insecurity, lack of infrastructure, the clash between tha National Assemble and Securities and Exchange Commission (SEC), among others.
The President of the Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie said, the capital market in the last one year did not perform better when compared with what happened under the leadership of the former DG of SEC , adding that Director General of SEC, Arunma Oteh knew next to nothing about the market and until she is removed, the market confidence will continue to be eroded.
He added that the call by the National Assembly that the SEC DG should be sacked is one of the ways to boost the market.
He also identified lack of infrastructure such as quality roads, power, and insecurity as some of the challenges that affect the performance of the capital market.
He however called on the Federal Government to take the issue of infrastructure more serious especially the ongoing reforms in the power sector, adding that for effectiveness of the capital market more needed to be done in the area of power.
He noted that most capital markets all over the world were in a state of recovering but that of Nigeria cannot be said to be so due to these challenges.
Mr Nona Awo an outspoken shareholder was of the opinion that the nation's capital market performed below average in 2012, adding that most of the Central Bank of Nigeria (CBN) and SEC reforms did not help matters, instead eroded the confidence of an average investors at home and abroad.
He called on investors not to lose hope on the market, adding that next year will be better than this year.
In his view, Mr. Tunde Oyediran, a market analyst with Deloy Consulting was of the opinion that the consistent raising of Monetary Policy Rate (MPR) by CBN culminated into uncertainty and lack of confidence in the market.
On stocks performance, he noted that the market is yet to come out of recession, adding that by next year the market will do better especially in the area of dividend payment to shareholders. He however disagreed with Mr Okezie that the DG should be sack, according him the DG should be allowed to continue what she is doing, adding her removal will only bring about apathy in the market.
Also the Chief Executive Office of Lambert Trust & Investment Company Limited, David Imafidon Adonri was of the view that although minor improvement was recorded, investors were expecting more from the market.
He explained that the year started out on bearish note with NSE All-Share Index (ASI) depreciating by 32.63 points or 0.15 per cent and market capitalisation dropping to N6.533 trillion, but at the close of trading last week NSE All-Share Index appreciated by 1.69 per cent to close at 27,866.51, while Market Capitalization of the listed equities appreciated by 1.73 per cent to close at N8.907 trillion.
He noted that it’s a slight improvement for the market when looking at the challenges confronting the market in 2012, adding that 2013 will be better if these challenges are fixed by the government. However, the Director General of SEC, Arunma Oteh was of the view that the capital market was not just fantastic by global standard, but that it experienced a growth of 30 per cent of the All Share Index.
According to her, it is not just one sector that is driving it, “ We also hope that the oil and gas sector, particularly the downstream sector, which has not done very well, will start to do well. We feel that what the government has done to tackle some of the issues in that sector is very important. We really hope that the Petroleum Industry Bill is promulgated.
“We feel that it is very important for the take-off of the upstream sector, particularly the indigenous sector, to complement some of what we have seen with respect to the rule around the local content. We feel that a number of indigenous companies would want to participate actively in that sector and the PIB, moving forward, will help that.”
According to her, their achievements had ranged from supporting products and business development, as well as the bond market, thus ensuring that the issues that were important to investors were considered.
She noted that additional projects, including the dematerialisation of share certificates, were being executed, stressing that they would all further strengthen the capital market.
“Compliance and rules are very critical for us and we are hoping that at the end of this year we will be able issue consolidated rules. The industries committee has already completed its work. It is now left to the SEC to review the work it has done and hopefully before the end of this year we would be able to issue the consolidated rules,” she said.
To boost investor confidence, she added, the SEC was working on an investor complaint management framework. She said once the investor confidence sub-committee, along with the capital market solicitors’ trade group, conclude a final review of the framework, SEC would issue a complaint management guideline.
Although, she agreed that some sector such as the insurance sector had not done so well despite National Insurance Commission (NAICOM) and the SEC efforts, but believed that 2013 would be better for the sector.
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