The projection of the Nigerian Stock Exchange to grow market capitalisation in 2016 to $1trillion (N150 trillion) might be a wide dream going by the current security challenges in the country and the dwindling fortunes of the stock market occasioned by dearth of liquidity.
While urging the federal government to be more apt and proactive in handling the menace of insecurity in the country, some operators who spoke to LEADERSHIP exclusively at the weekend noted that most investors were exiting the nation’s capital market to other emerging markets in the continent due to the growing security challenge in the country, hence, posing a serious threat to efforts put in place so far by the regulators to attract foreign direct investments.
They argued that the few foreign investors that have decided to play in the Nigerian stock market after the exit of their counterpart have begun offloading their shares massively due to the fear of losing their portfolio.
Speaking on the achievability of the target, the Managing Director, Crane Securities Limited, Mr. Mike Eze, who expressed worry over the current situation in the stock market, said unless the government focuses its attention on the market and tackles the rising wave of insecurity in the country the projection will be a mirage.
Eze also expressed optimism that if the Central Bank of Nigeria (CBN) focuses on the capital market as promised, the market could be in the path of glory to achieve the target.
He noted that that the liquidity squeeze in the market has made it difficult for the market to thrive, adding that for the market to recover from losses incurred during the unprecedented lull in the stock market, government must provide fresh fund as a bailout for the market.
‘’We have tried everything within our powers and the market is stubbornly holding on. There is need for government to come and bail out the market. They did same in the aviation and textile industries, Central Bank of Nigeria (CBN) did same with the banks , why can’t they bail out the market which is the engine room of the economy.
“They should provide the intervention fund to mop up the excess shares that are in circulation. That is the only thing that can help this market to come up again.
Eze noted that CBN intervened in the bank, cleaned up their balance sheet, took away the excess shares they bought through margin loans and gave them back the monetary equivalent. What about the stock market, can’t same be done in the stock market?”
The managing director lamented the inability of government to find a lasting solution to the high rate of insecurity in the country.
He noted that the insecurity in the country was having a multiplier effect on the stock market, adding that it is a contributory factor to the unprecedented lull being witnessed in the market.
“It instills instability in the market. It is putting fear in the mind of everybody and scares foreign investors from us. To a large extent, it is having serious effect on the market.
“Government should get hold of people behind this and get them sanctioned. They should also dig deep to find out those sponsoring them and bring them to book,” he advised.
The president of the Progressive Shareholders Association, Mr. Boniface Okezie, said the way and manner the exchange was being run would make it impossible to achieve the target.
Okezie noted that the affairs of the NSE were still run through the interim administration planted in the Council which according to him, was scaring both the local and foreign investors from taken position in the stock market.
He also lamented the high rate of insecurity in the country, saying that the current situation could not attract investment in the country, but rather impedes it.