In spite of the 0.31 per cent appreciation recorded by the Nigerian Stock Exchange (NSE) All-Share Index and market capitalisation at the close of last trading week of the third quarter of 2016, shareholders lost N432 billion during the period under review.
The NSE All-Share Index and market capitalisation closed at 28,335.40 and N9.733 trillion respectively during the review period. Available statistics to New Telegraph showed that activities on the floor of the NSE continued to skew downward, as the market, which opened at N10.165 trillion in market capitalisation and 29,597.79 in index at the beginning of trading last July, closed the Q3 at N9.733 trillion and 28,335.40 index points, hence translated to a loss of about N432 billion or 4.26 per cent year to date.
Low sentiment in the market had worsened following investment apathy, which had made both foreign and local investors remained on the sidelines due to upset in the financial market arising from drop in oil price, instability in forex and poor HY 2016 financial results.
Financial analysts believed some of these factors sent a shock wave to both local and foreign investors and created uncertainty in the investment environment, which led to a retreat on the part of the bargain hunters.
The Chairman/CEO of Partnership Investment Plc., Mr. Victor Ogiemwonyi, while explaining why the activities in Nigerian capital market, which had been on downward swing for a considerable period of time, said the market lacks longterm liquidity and this makes it hard to attract investors who don’t see growth soon.
“Those who have traditionally provided liquidity have gone away one by one. The retail investors were driven away in the crash of 2008 with the casino banking crisis we saw and the severe losses that followed. They have not come back. The banks that provided margin loans have also permanently stayed away and now foreign portfolio investors who want quick profits have also now left for good,” he said.
Following the present state of the market, the Securities and Exchange Commission (SEC) recently expressed its determination to raise the participation of retail investors in the Nigerian Capital market, as that was one of the critical ways of deepening the market.
Director General of SEC, Mounir Gwarzo, stressed that the dominance of the market by foreign investors was one of the reasons why the market is not as deep as it ought to be. He said: “Our intention is to ensure that we raise the level of participation of retail investors in the market, that is the only way we can maintain the strength of the market. Dominance of the market by foreign investors is one of the reasons why our market is the way it is.
Although it is the pattern of the market, but this dominance is a major factor because they are the ones that come in and go out. We need to upscale the participation of the retail investors in the market and that is why we are addressing some of their concerns.
“Anyone you meet today and tell him to come back, the issue of unclaimed dividends is always a major problem.” In order to achieve this, the DG disclosed that the Commission has embarked on various initiatives like recapitalisation, e-dividend registration, the Direct Cash Settlement as a direct benefit to investors from the edividend registration. According to him, “We are urging Nigerians to go and register to get their dividends electronically.
Once we get through with the e-dividend thing, we will be able to deal with other issues in the market. The entire market has commenced Direct Cash Settlement. The era when shares will be sold and the proceeds will be given to the broker who will then pay the client is over.
“What is obtainable now is that once the shares of an individual are sold, the proceed is paid directly into his bank account. With this, once the client has authorized the broker and provided all his details, the proceeds will be paid into the client’s account.”
Gwarzo said that every year, the Commission comes up with various initiatives from the Master Plan and have been implementing them. “All the initiatives we came up with last year, we have implemented them. This year, we also came up with certain initiatives and one of them is the need for all arms of government to buy into the Capital Market Master Plan. It is only in Nigeria that we have not been given the kind of attention that the capital market deserves. The capital market is the one that defines the state of the economy,” he added.
