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Investment In Alternative Securities Market Declines By N1.33bn



Investment on the Nigerian Stock Exchange (NSE)-Alternative Securities Market (ASeM) declined by N1.33 billion. Capital market operators attributed the poor performance of the companies listed on the sector to lack of information flow and poor corporate governance.

Available data showed that the NSE-ASeM capitalisation which opened for the year at N10.432 billion declined by N1.33 billion to close at N9.099 billion as at June 14, 2018. Also, NSE-ASeM index fell to 9.49.59 points at the end of trading on June 14, 2018 from 1,087.32 points at the beginning of the year, representing 12.67 percent negative return to be the highest decliner of the NSE indices.

The NSE delisted the shares of Afrik Pharmaceuticals Plc worth N12.45 million on April 6, 2018 from the sector. Meanwhile, the NSE All-Share Index recorded a year to date gain of 1.79 per cent as at June 14, 2018.

Also, on January 29, 2018 the NSE began the implementation of new pricing rules which removed the stopgap that has supported stocks at their nominal value. The new rules now allow shares of quoted companies to trade for as low as one kobo.

The companies on the sector were affected by the rule, while some of the stocks experience inactive performance as prices remain unchanged. Chellaram, Juli, Smart Products Nigeria, Amino International and Rak Unity Petroleum Company shares’ price remain at N3.08, N1.67, 54 kobo, 25 kobo and 50 kobo per share, respectively. Mcnichols shares went down by 18.33 from N1.20 at which it opened for the year to 98 kobo as at June 14th. Omoluabi Mortgage Bank recorded a year to date decline of 5.33 per cent to close at 71 kobo, The Initiates down by 7.32 per cent, while Capital posted a year-to-date decline of 34 per cent.

The Alternative Securities Market (ASeM) is a specialised board of the Nigerian Stock Exchange (NSE) for emerging enterprises with high growth potential. ASeM provides smaller companies the avenue to access the capital market and raise long-term finance through less stringent listing rules and requirements in line with regulatory requirements of the Corporate Affairs Commission (CAC) and the Securities and Exchange Commission (SEC).

With the numbers of small and medium scale enterprises (SMEs) in the country, yet the NSE has been able to attract and list only eight SMEs companies on the NSE ASeM sub-sector.

This is despite regulatory efforts at reviving the alternative securities market (ASeM) of NSE, companies listed on this segment of the market are yet to attract the needed liquidity from local and foreign investors.

Managing director/CEO of Dependent Securities Limited, Mr. Chinenye Anyanwu, said that apart from having small float, the number of companies listed in sector are few. He explained that financial performance and information flow from the companies would increase their attractiveness to investors, saying that “they are not the drivers of the index. For some obvious reasons, the activities are low, but a few of them have been very consistent in paying dividend.”

Also, managing director/CEO of APT Securities, Mallam Garba Kurfi, noted a number of the companies listed in the sector are dormant, saying that they are not active in terms of releasing their results. On listing of new companies in the sector, he said there is need for the NSE to increase engagement with owners of small business to encourage more listing in the ASeM.

Recently, the president of Lagos Chamber of Commerce and Industry (LCCI), Babatunde Ruwase called on the management of the NSE to jointly work together and explore options of financing small businesses in the country.

He said like other economies, SME’s are critical to economic development especially the creation of jobs and the promotion of inclusiveness in the Nigerian economy, adding that funding SMEs has remained a major challenge.

“It has been difficult to unlock the potentials in the sector partly as a result of this problem. We would like to partner with the NSE in the promotion of good corporate governance and scaling up of business ethics. We are concerned about the deterioration of values of trust and integrity in business practices,” he said.

Ruwase noted that monetary, fiscal and trade policies have significant impact on the performance of the stock market and private sector investments generally, adding that it would be useful for the two organisations to collaborate and promote investment friendly policies in the economy through regular engagements with the relevant authorities of government.

According to him, we seek collaboration with the Nigerian Stock Exchange in making this happen, especially in mobilisation of capital for investors, especially the indigenous ones. The costs of fund in the money market as well as tenure of funds are not in tune with the yearning of investors, especially those with a long term perspective. This has constrained the growth of key sectors including agriculture, manufacturing, property, construction and infrastructure.

Ruwase said the capital market window naturally provides the good option for funding of such investments, adding “We would like to see a better impact of this funding window.  There is also need to collectively strengthen advocacy to make pension funds available for long term financing needs of the economy.”