Stockbrokers X-ray Nigerian Capital Market at 61

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Stockbrokers X-ray Nigerian Capital Market at 61

Stockbrokers under the aegis of the Chartered Institute of Stockbrokers (CIS) and Association of Securities Dealing Houses of Nigeria (ASHON) have identified some achievements, challenges and the way forward for  the Nigerian capital market at 61.

The NGX, formerly Nigerian Stock Exchange was incorporated in 1960 but commenced business in 1961.

In a separate statements , the two bodies explained that the market had contributed significantly to the growth and development of of the economy but a lot should be put in place to operate optimally in the current tough environment.

The President, Chartered Institute of Stockbrokers, Mr Olatunde Amolegbe in a statement explained that the market, relative to the economy was abysmally low.

“ It’s not heartwarming to say that the Nigerian capital market, relative to the size of the country’s economy, is still abysmally low, as the equity market capitalization to GDP ratio stands far below 20%, in contrast to the South Africa’s 348.3% and Brazil’s 68.4%.The ratios in the key developed economies are in excess of 100%. The participation of Nigerians in the capital market is very low. Less than 5% of the country’s population are involved in the market as investors, while less than 1% of registered companies are listed.

“ Despite the tough operating environment,  the Nigerian Stock Market was adjudged the best in Africa and No.3 in the world in terms of Return to investors in 2017. Three years later, in 2020, the market was adjudged the best in the entire world.”, said Amolegbe.

The Institute advocates a review of the enabling legal frameworks to encourage the local pension funds to significantly increase their investment in the Nigerian equity market.

According to him, an institution like the CIS which is primarily responsible for training and certification of individual practitioners and propagation of capital market literacy across the country requires financial support such as grant from both government and market regulators to support the drive.

“ The National Assembly should give expedited hearing and passage to the proposed Chartered Institute of Securities and Investment Market (CISIM) Bill which will properly update existing legislation to be at par with the realities of the global capital market .” , said Amolegbe.

Corroborating him, ASHON’s Chairman, Chief Onyewenchukwu in a statement said the market challenges emanated from buy and hold attitude of many investors and the lack of synergy between the regulators and operators.

Ezeagu noted that buy and hold attitude of many investors was as old as the market, attributing this to ignorant of dynamics and benefits of investment in shares.

“ The challenges of the Nigerian Capital Market runs in tandem with the challenges of the country giving credence to the belief that the capital market is a barometer of the economy of a nation.  However, the market has stood the test of time despite the huge challenges of an underdeveloped country and some peculiar problems.

“  The challenges emanate from buy and hold attitude of Nigerians who are ignorant of the nature and benefits of the capital market. There were few investment outlets in the market at inception. There is a problem of poor internet data, lack of synergy between the regulator and regulated andGovernment policy summersault.”, said Ezeagu.

He explained that there was a need to expand the frontier of awareness creation to strengthen investor education.“ We have overcome most of the historical challenges but a lot need to be done in the creation of awareness of the benefits of the market to the large population of the country.  There is the need for concerted efforts to reverse investor apathy due to the market downturn of 2008.  We must improve on our identity management essentials to ensure that existing investors receive dividends promptly.  This  will reduce fraud and enhance confidence.

“ The government should patronize the capital market and prevail on regulatory agencies to cooperate more with capital market operators by guiding them to success rather than waiting on them to fall into infractions attracting huge sanctions.  The capital market operators are still impoverished as a result of the market downturn of 2008, hence there is a need to to bail them out through appropriate policy measures.

“ The structure of the Nigerian Financial System is overdue for review. We the operators  have articulated a paper on this which we submitted to the regulators.  There is the need for a review of the system to ensure a balance between the capital market and the money market as well as expand the scope of operations of the capital market operator.”, Ezeagu said.

 

 

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