Stakeholders advocate market incentives to attract retail investors
Experts have called for incentives to attract retail investors and create sufficient local capacity to counter the effects of fleeing foreign portfolio holders.
The stakeholders argued that the lull witnessed in the market in the past few years was partly due to the exit of foreign investors, who have created instability in the market.
They noted that local investors were the most affected by the 2008 financial meltdown; hence, they need fresh motivation to return fully to the market.
According to them, depending on foreign investors to deepen the local bourse is a wrong approach to growing an institution often described as a “barometer used in measuring an economy.”
They urged the government and other stakeholders to step up investors’ campaigns on the benefits of investing in the capital market.
Since the beginning of 2020, domestic investors have led in stock market patronage, accounting for 70.1 per cent in January 2020, 51 per cent in February 2020 and 54.63 per cent in March 2020.
At the end of the 2020 financial year, domestic investors accounted for 65.28 per cent of market turnover by value while foreign portfolio investors accounted for 34.72 per cent.
Consequently, the performance index soared by 50.03 per cent in 2020, making the Nigerian stock market the best performing globally.
The Chief Research Officer, Investdata Consulting, Ambrose Omodion, said if the government can empower the retail investors by providing some form of incentives, it would help restore confidence and boost their patronage.
“Some portfolio investors are coming to take advantage of the market and the moment they exit, the market moves to the starting point. We have to get the underlying market strengthened, and make the real sector productive.”
He noted that foreign investors were concerned about the adverse effect of Nigeria’s macroeconomic challenges, especially the stability of the monetary and exchange system.
An independent investor, Amaechi Egbo said since the 2007 economic meltdown the investors are not encouraged to increase their participation.
“But with the return of bulls and the 2020 uptrend occasioned by increased participation from domestic investors, they should educate people that the capital market is not a capitalist one but a platform for long-term investment.”
The President, Association of Stockbroking Houses of Nigeria (ASHON), Patrick Ezeagu, said the Nigerian capital market can attract local investors by ensuring that there are proper incentives such as good and operational corporate governance practices, favourable policies and social-economic environment, appropriate and fair tax regime.