…call for robust debt structure
Investors and other stakeholders in the Nigerian capital market have expressed diverse views on the N2.970 trillion astronomic gain recorded in the third quarter of 2017.
While some saw the growth as an indication of a rebounding economy, others warned that the economy was in dire need of budgetary discipline.
Activities during the quarter grew by about 32.12 per cent, as the market capitalisation of listed equitiesincreased from N9.24 trillion as at January 2017, to N12.217 trillion by the end of September 2017.
A range of government policies and discipline in certain areas should be aimed at stimulating economic growth, typified in the made-in-Nigeria initiative, to strengthen investors’ confidence in the economy
The sectoral indices for the period under review showed that all the indices closed positively, except Oil and Gas, which declined by 13.10 per cent.
While the NSE Consumer Good index led the gainers chart by 15.89 per cent, the Banking index followed with a gain of 10.60 per cent. NSE 30 index appreciated by 7.84 per cent. Under this, NSE Industrial index increased by 2.69 per cent, while NSE Insurance index rose by 1.36 per cent.
Aside from the market capitalisation, the positive trend in the market also reflected on the All-Share Index, which at the end of the third quarter, appreciated by 8,565.36 basis points or 31.87 per cent, to settle at 35,439.98 points.
‘BULLS HAVE COME TO STAY’
Although, trading activities within the period have been volatile in response to various macro-economic signals, just as the market indirectly lost value to developments like holidays, festivals and profit-taking, analysts are of the opinion that the capital market is surely improving, compared with what obtained in 2016.
The growth experienced by the market significantly in the second and third quarters is seen by some as a reflection of various economic measures that have resulted in pulling the Nigerian economy out of recession.
Managing Consultant, CITC Global Consulting, Mr. Tayo Orekoya, said despite what was happening in the economy, the results released by quoted companies on the Exchange showed that the economy was gradually getting out of the woods.
Orekoya, a Fellow of the Institute of Chartered Accountants of Nigeria, believed that Nigeria had cause to celebrate, as things were beginning to look up despite the economic unease of the past year, evident in the degree of forex fluctuations, infrastructural decadence, and other challenges.
Others warned that if the government was set to sustain its measures, it must imbibe budgetary discipline, fiscal incentives and enhanced securities network, among others.
The Managing Director, Highcap Securities Limited, Mr. David Adonri, admitted that investors’ confidence had been reinforced by relatively increased corporate earnings that were consistent with forecasts while some companies actually exceeded forecasts. He, however, said it was important for the government to implement budgetary discipline, fiscal incentives and enhanced securities network, among others.
“The business environment in Nigeria is becoming more conducive with the stability in forex market and reduced insecurity level. A range of government policies and discipline in certain areas should be aimed at stimulating economic growth typified in the made-in-Nigeria initiative to strengthen investors’ confidence in the economy,” he said.
The Managing director, APT Securities and Funds Limited, Mallam Kurifi Garuba, said, “After posting a negative return in the 2016 full year, Nigerian equities rebounded strongly, from January to September 2017, with the All Share Index posting a 31.87 per cent gain. The bullish proceedings in the third quarter would have been more stellar, save for the selloff that dominated the most of the month of September on gloomy investors’ sentiments.”
WE NEED ROBUST DEBT STRUCTURE – ANALYSTS
However, the Chief Executive Officer, Chapel Hill Denham, Mr. Bolaji Balogun, explained that government must be strategic to fast-track Nigeria’s economic growth, and stimulate activities in the market, to secure the future of the bourse.
He argued that there was the need to transform the market from primary commodity market to a robust debt capital market to develop the country and secure its future.
According to him, the country can witness a reasonable level of growth if government compels firms receiving concessions or subsidies to float initial public offerings in the market within three years.
“There are evidences that Nigeria’s economy needs to be recreated. There are four basic yardsticks for assessing the business environment – available infrastructure/utilities, regulations, business development support and more importantly, security,” he said.
He noted that the integrity of the Nigerian capital market, where investors had tremendous confidence in the dealings on the floor of the exchange, was essential to the economic growth and development of the nation.
Also, the Managing Director and Chief Economist, Africa Standard Chartered Bank, United Kingdom, Ms. Razia Khan, said Nigerian regulators must ensure increased collaboration with market players to enhance activities in the debt capital market.
At the Monetary Policy committee meeting held last week, the CBN Governor, Mr. Godwin Emefiele, affirmed the continuing improvement in Nigeria’s external reserves position and the equities segment of the capital market. “Foreign reserves’ position grew to $32.9 billion at the close of business on September 25, while the All-Share Index rose by 7.20 per cent, from 33,117.48 on June 30 to 35,504.62, on August 31.”
Emefiele said the continuing intervention of the apex bank in ensuring foreign exchange liquidity in the country had, to some extent, further restored confidence of foreign investors to return to active participation in the country’s capital
market.
Conversely, the MPC committee also noted the success of the Investors’ and Exporters’ window of the foreign exchange market, which had brought respite to business deals in the two areas.
“The I&E window has increased liquidity and boosted confidence in the market with over $7 billion inflow in the last five months,” Emefiele observed.
The year-to-date total transaction value at the NSE stands at N1.526 trillion, 83.38 per cent higher than N832.31 billion posted in the comparative period of
2016.
NSE data on Foreign Portfolio Investment also indicated 89.19 growth in expatriate participation in the equities market with a record of N699.07 billion transaction value in the reviewed period, against N369.56 billion in the same period,
last year.
