Market operators seek policy implementation on infrastructure funding

Nigerian Stock Exchange

…as investors’ lose N393b in one month

Capital market operators have stressed the need to implementation appropriate legislation that would compel the Federal Government to fund nation’s infrastructural development through the capital market.

Besides, they argued that compelling the Bureau of Public Enterprises (BPE) to sell at least 40 per cent of privatised national assets through the instrumentality of the Capital Market would help restore investors’ confidence.

The operators, who regretted that government in its monetary and fiscal policies, in the last few years, has tended to completely neglect the capital market as a major component of economic development, maintained that accessing infrastructure funding from the market would deepen the market and fast track economic development.

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. At the end of 2016 transactions, investors’ wealth depreciated by close to N2 trillion in equities.

Also, the market capitalisation of the Nigerian Stock Exchange (NSE), which opened the year at N9, 158 trillion on Tuesday, January 3, 2017, now stand at N8,765 trillion as at Tuesday, February 28, 2017 shedding N393 billion or 4.3 per cent., while the All-share index slides by 1287.6 points or 4.8 per cent, from 26,616.89 to 25,329.08.

According to them, the country had suffered weak infrastructural development and limited revenue base, amid strong and competitive economic fundamentals in the past few years.

Specifically, the Chairman, Association of Stockbroking Houses of Nigeria (ASHON) Patrick Ezeagu explained that one the major challenges facing the market is how to restore investors’ confidence in the market.

He, however, noted that selling at least 40 per cent of privatised national assets through the market would engender fair valuation, transparency, accountability, integrity and greater participation of the average Nigerian investor.

“Key issues that can accelerate market growth include the downward review of the Monetary Policy Rate (MPR) to stimulate investment, policy stability, clear and stable foreign exchange policy and implementation of appropriate legislation that will compel the Federal Government to fund its infrastructural development through the capital market.

“Government should compelling the Bureau of Public Enterprises (BPE) to sell at least 40 per cent of privatised national assets through the instrumentality of the capital market to engender fair valuation, transparency, accountability, integrity and greater participation of the average Nigerian investor.

“Utilising the capital market to raise funds for infrastructural development projects, ensuring security of lives and property as a panacea for peace and development and pursuing diversification of the economy away,” he added.

The President of the Chartered Institute of Stockbrokers (CIS), Oluwaseyi Abe also appealed to the federal government to consider the age-long plan to encourage multinational companies to list on the NSE in order to deepen the market and enhance liquidity in the medium and long term

Abe lamented that despite strong potentials of the nation’s capital market to generate huge returns on investment (ROI), many blue chip companies are trading below their intrinsic values.
   
He noted that the business terrain must be more investor- friendly for micro Small and Medium scale Enterprises to flourish, noting that the capital market must be developed to assist local entrepreneur grow their businesses.

He said that the capital market instruments allocates capital which enhances economic performance that provides a window through venture capitalism for the growth of small and medium scale enterprises.
   
He urged investors not to despair on the current period, rather to leverage on the low share price to beef up their portfolio.
The registrar of the institute, Adedeji Ajadi stressed the need for government at all levels in Nigeria to access finance through the capital market to fund more developmental projects.

According to him, the country needed to break out from a vicious cycle of poverty and its attendant socio-economic imbalance through optimal utilisation of the capital market to finance small businesses and long-term projects.
   
He added that the capital market instruments allocates capital which enhances economic performance that provides a window through venture capitalism for the growth of small and medium scale enterprises.



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