Some operators in the capital market have appealed to the Federal Government to address the N300 billion debt overhang in the market.
The debts arose from the “margin loans” taken from banks by some dealers and shareholders to buy shares and position themselves before the crisis in the market.
The crisis is now affecting the repayment of those loans.
The operators told the News Agency of Nigeria (NAN) in Lagos on Monday that the debt overhang was constraining the recovery of the market.
According to them, concerns of dealers and investors are on settling the debts and this is impacting negatively on activities in the market.
Alhaji Rasheed Yussuf, the Managing Director of Trust Yield Securities Ltd., said that the poor daily transactions were due to illiquidity and activities of foreign investors who were only “profit takers”.
He said that the inability of the government to bailout the capital market showed that government was not thinking in the direction of the growth of portfolio investment in the country.
Yussuf urged the Ministry of Finance to come up with a bailout package for the affected investors, instead of politicising the issue of margin loans.
Mr Sehinde Adenagbe, the Managing Director of Standard Union Securities Ltd., said that the delay in releasing companies’ audited results was contributing the to the lull in the capital market.
Adenagbe said that some investors were waiting to see the outcome of the House of Representatives probe on the capital market before taking investment decisions.
Mr Eugene Ezenwa, the Managing Director of Pac Securities Ltd., said that rise in treasury bills rates had led to movement of funds from capital market to money market instruments.
According to him, the investor confidence would continue to wane until banks resumed lending to dealers and other operators in the economy.
Ezenwa said that there was urgent need for palliatives to empower local investors so as to check the overbearing influence of foreign investors in the market.