As Nigeria prepares for the 2015 fiscal year, authorities of the Nigerian Stock Exchange (NSE) have called for more investment in the Nigerian Capital market as a way of further boosting the fortunes of the country’s economy.
While canvassing for increased investment in the stock market alongside other key stakeholders of the Nigerian Capital Market at the 2014 FCSL Asset Management Limited investors’ Forum held in Lagos recently, the Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema advised investors to exploit the emerging opportunities in the Nigerian Stocks at the moment to invest in the capital market.
“This is the best time to invest in the Nigerian Capital market. We have restored confidence in the system through introduction of corporate governance, which allows companies to do business in a transparent and sustainable manner. Investment in the Capital Market is long term and it is one which requires attention and the support of parties concerned, to grow”, Onyema counselled.
He further dispelled the negative notion of continuous instability in the market. According to him, “Investors should know that the capital market is a cyclical market with up and down movements. The market is full of risks. I encourage investor to seek professional advice from investment specialists and stockbrokers that will be able to manage their investment in the market. Also, investors can personally manage and monitor their investment portfolios in a manner that will reduce risk and improve returns. Investors have to adopt appropriate techniques in making investment decisions, because the capital market is not for gamblers, it is not a game of chance but a game that requires informed decision”.
Although, the NSE boss was not specific on when the seeming lull in the capital market will subside, he however gave assurances that with the on-going reform and support of all the stakeholders, reasonable confidence is gradually returning to the market.
In her presentation, Mrs Olubukanla Rufai who stood in for the Director-General of the Securities and Exchange Commission, Nigeria (SEC), Ms Arunma Oteh noted that the Nigerian Capital Market presents immense opportunities to catalyze long term sustainable economic growth with the potential to become the leading financial hub within the African continent in the near future. According to Rufai, “The Nigerian Stock Exchange (NSE) at USD 117 billion in 2013 ranked as one of the largest in Africa in terms of capitalization, although a distant second, behind the Johannesburg Stock Exchange (JSE) capitalized at USD 942 billion while ahead of the Egypt Stock exchange (EGX) at USD 61 billion.”
She noted also that the Nigerian bond market witnessed the first supra-national bond floated by the International Finance Corporation (IFC) in February 2013 worth N12.0 billion (US$76 million) and the first Sukuk worth N11.4 billion in July 2013 sponsored by the Osun State Government.
According to Olubukanla, “equities market capitalization in December 2013 was N13.23 trillion compared to N8.97 trillion in 2012. Domestic participation when compared to foreign participation in July 2013 was 62.53% to 37.47%. As at July 2014, domestic participation improved tremendously to 78.83% while foreign participation was 25.17% and in 2014, the Capital Market recorded a new global offering (Seplat) listed simultaneously on the NSE and the London Stock Exchange in April 2014”.
While speaking on Corporate Governance: A new dawn in the Regulation in the Nigeria Capital Markets, Mr Bode Augusto, former Director-General of the Budget Office of The Federation painted a challenging picture of the 2015 fiscal year due to the dwindling fortune of the Naira and political situation in the country. He however observed that there is hope at the end of the economic crisis.
On his part, notable Lawyer, Mr. Asue Ighodalo, listed challenges facing the capital market to include technological limitation, lengthy/cumbersome deal execution/implementation, prohibitive pricing (both transaction costs and cost of funds), Low Financial Literacy levels and doubtful transparency among others.
Ighodalo however suggested that federal government and Legislature must truly encourage, rather than seek to compel players in target sectors of the economy to list on the NSE. He also advised that the Federal Inland Revenue Services (FIRS) must not consider every tax-exemption proposal as “reducing its take”, while the Focus on development of Alternative Securities Market (ASeM), considerable improvement in financial literacy, modification of current strict rules-based compliance approach, enhancement & deployment of technology at all levels (SEC, NSE, Operators) and demutualisation of the NSE must all be expedited.
On how to turn the prevailing challenges to opportunities, Dr Biodun Adedipe, an economist said, “As stakeholders rise to the identified challenges, we may also see more socially responsible behaviour by listed companies, operators and investors alike. This makes everybody a winner. Indeed, we should witness the emergence of Socially Responsible Investor (SRI) Community that seek a balance between financial return and social impact”.
He also advised thus: “We can conclude in more specific terms that there are clear opportunities for wealth creation at this point in time that the Nigerian market is bearish. The logic is to buy when others are selling as, of a necessity, the sun will shine again! If instead of running away from the market, investors actually dig in and buy more, wealth would be spread more and could reverse the global trend of wealth concentration, as market recovery drives both return and inclusive economic growth.”
The Stakeholders forum, according to Mr Lekan Belo, Managing Director of FCSL Asset Management Limited is the commitment of the company towards stimulating interest in the capital market, while also helping to create increased investment and financial awareness in the economy.