With over 12 per cent loss suffered by stock market investors as a result of unprecedented fall in equities price, stakeholders in the nation’s capital market have urged government to fast track the release of specific growth- inducing policies that would help revamp the current sluggish economic trend and trigger activities in the various segment, especially the stock market.
The losses were calculated on start up All-share index at the beginning of the year from January 4, 2016 to Wednesday, March 30, 2016.
Indeed, the nation’s capital market has recorded unprecedented lull from the first quarter of 2015, due to volatile foreign exchange and other macro- economic concerns.
The market experienced sustained volatility as investors’ exited positions and speculators went bargain hunting.
Specifically, the market capitalisation of listed equities which opened the year at N9,757 trillion as at January 4, 2016, now stand at N8,649 trillion as at Wednesday, March 30, 2016 down by N1.1 billion or 12.8 per cent in three months , while the All-share index went down by 3,225.04 points or 12.8 per cent from 28,370.32 to 25,145.28.
The stakeholders who spoke with The Guardian on a separate interview maintained that government have failed to revamp the sluggish economy and boost purchasing power.
According to analysts, government should articulate an integrated blueprint that would boost investors’ confidence and attract local institutional investors to buy more shares in the market even with the current low stock prices.
The Managing Director of Crane Securities Limited, Mike Eze explained that foreign investors are exiting the market on a daily basis due to the sustained volatility and other macro –economic concerns facing the nation’s economy.
He added that some local and institutional investors have also offloading their portfolio due to apathy and lack of confidence in the market
“What we are witnessing now is that foreign portfolio investors are exiting and whenever this happens, the market goes negative. Equally, local investors also panic and join the foreigners to exit so you notice a general downward trend.
“The perceived volatility usually impacts negatively on the all share index and the total market capitalisation. Mark you, the back and forth decision between the executive arm of government and the legislature is also taking its toll on the market. This volatility in the market can be attributed to the factors enunciated above,” he said.
An operator and market analysts, Tunde Oyediran attributed the downward trend witnessed in the market to inability of government to make policy decisions that would spur activities in the various sectors of the economy.
He noted that for the market to witness a reasonable level of recovery, the regulators and government must brainstorm on how to initiate policies that would attract institutional portfolio investors to increase their stake in equities and bonds.
“The market is economic induced. If the economy is doing wee, its obvious it would reflect on the market. Shares outstanding of some companies, especially the banks are high and the local investors capacity to buy is low, while the foreign investors are dumping our stocks and exiting to take advantage of their country’s economy the is booming with high interest rate.
“When companies release their result, foreign investors offload large quantity of thjeir portfolio and this affect the market even at this period that companies are paying good dividend”.
“Government should encourage insurance companies, Pension funds to increase their stake in the market. PENCOM is doing 12 per cent currently; they should increase it to 25 per cent or more. They should fix the economic indicators and stimulate the economy to attract more local participation in the market,” he added.
The National President, Constance Shareholders Association of Nigeria, Shehu Mallam Mikail who bemoaned the current state of the market, explained that the major factor responsible for the persistent lull in the market was government’s weak fiscal execution culture.
He pointed out that there was need for effective implementation of the spending plan to boost purchasing power of the people and create employment opportunities.
“Stocks price are going down , a lot of things are going wrong and these are the signals that are eroding investors’ confidence the more even with the incentives. We have all it takes to compete favorably in the global market but no good policies to drive these good cultures,” He added.
An independent investor, Amaechi Egbo attributed the situation to over dependence on foreign investors while the local ones that are affected during the recession were being neglected.
He explained that foreign investors are currently exiting the market while the local ones does not have the financial muscle to buy more stocks eve with the low prices of equities.
He urged regulators to create incentives that would help attract more local participation and listings in the nation’s bourse.
