Stockbrokers, under the aegis of the Chartered Institute of Stockbrokers (CIS) and Association of Securities Dealing Houses of Nigeria (ASHON), have identified some 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 separate statements, the two bodies explained that the market had contributed significantly to the growth and development of the economy but urged that 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.
He said: “The Nigerian capital market, relative to the size of the country’s economy, is still abysmally low, as the equity market capitalisation to GDP ratio stands far below 20 per cent, in contrast to South Africa’s 348.3 per cent and Brazil’s 68.4 per cent.
“The ratios in the key developed economies are in excess of 100 per cent. The participation of Nigerians in the capital market is very low. Less than five per cent of the country’s population is involved in the market as investors, while less than one per cent of registered companies are listed.”
The institute advocated a review of the enabling legal frameworks to encourage the local pension funds to significantly increase their investment in the Nigerian equity market.
Corroborating him, the chairman of ASHON, Chief Onyewenchukwu Ezeagu said the market challenges emanated from the buy and hold attitude of many investors and the lack of synergy between the regulators and operators.
Ezeagu noted that the buy and hold attitude of many investors was as old as the market, attributing this to ignorance of the dynamics and benefits of investment in shares. He explained that there was the need to expand the frontier of awareness creation to strengthen investor education.