Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), Chief Oyinyechukwu Ezeagu, a Fellow of the Chartered Institute of Stockbrokers (CIS), speaks with The Kernel on the Association’s efforts to reposition its members ahead of dynamic of changes in the Capital Market.
What is your general appraisal of the capital market this year?
The market has shown great signs of resilience over the years. However, these days we are looking at a broad range of markets and the readiness of operators to participate in these markets. We have seen an expansion in fixed income investments, in Government Securities and renewed interests in the Commodities Market. The listing of two telecommunications companies excited the market within the year.
Specifically, what is your impression of the equity market, compared to fixed income securities?
Equity market represents the market of the real owners of the firm taking into consideration the features of the theoretical common stock. The performance of the equity market in Nigeria is not different from its worldwide nature of performance. Equities have been dwindling all over the world and has become enigmatic for traders who cannot keep up with continuous price volatility, especially, where other asset classes like fixed income proved better alternatives.
What are the implications for the market regulators, operators and investors?
This has serious implications to the operators who hold equities as part of their capital, they have to contend with pressures from regulators to maintain the minimum regulatory capital requirement. On the part of investors, there is a renewal of the age -long attitude to buy and hold which also impacts on market liquidity. However, with the recent pronouncement by the Central Bank of Nigeria, equities market seem to have responded positively.
ASHON appears to have embarked on some initiatives to reposition itself ahead of demutualization of The Nigerian Stock Exchange, can you shed light on these?
The demutualization of the Nigerian Stock Exchange has been in the works for a while and ASHON has been involved in the discussions. We represent firms that will transit from members to shareholders of the Exchange. We are gearing up to this new responsibility and the benefits we expect to flow from the laudable venture. Our members are being repositioned to operate under the demutualized Exchange. ASHON’s members are currently the owners of The Nigerian Stock Exchange. We have embarked on strategic restructuring to bolster the members’ image, consolidate a formidable team and review internal processes among others. The process of Demutualization of the NSE is approaching a climax. We expect that we shall transform from being members to Shareholders soon. It is important that we prepare ourselves for the change in status which comes with some responsibilities and new realities. All our members representing us both at the Advisory Committee and the NSE Council have been working tirelessly to defend our collective interests in the demutualization process.
Did ASHON re-design its logo as part of preparation for demutualization?
In order to effectively reposition the image of the Association, we redesigned and changed the brand identity of the Association with a logo of progressive bars of different vibrant colors to depict the new thinking and divergent positive outlook of the Association. The Association has set out to reposition herself and Members to expand our horizon by exploring the potentials of trading in other securities like commodities and fixed income.”, he said.
Taking a cue from the current situation in the capital market, how would you advise investors as we approach 2020?
The economy is changing, the environment is changing as technology evolves with the times. We encourage investors to embrace technology so as to keep abreast with the new ways of doing business in terms of investing, reporting, earnings and record keeping/retrieval. The investors should not, notwithstanding the ease of doing business offered by technology, neglect the expert advice of their Stockbrokers.
What policy measures should the government put in place to revive the economy since there is linear relationship between the economy and the capital market?
The government should involve capital market professionals in the preparation of the National Budget. It portends good if Stockbrokers are co-opted into some government policy making fora that relate to the capital market and the economy in general. We cannot but emphasize that our capital market has the capacity to finance infrastructural development needs of the country if properly harnessed and government has a role to play in using the Capital market to fund its infrastructural needs. Furthermore, until government begins to see the operators in the capital market as partners in progress, the paucity and high cost of funding of infrastructure will continue to be a nightmare that will ultimately have negative impact on the economic performance of our national budget.