Market capitalisation of quoted equities at the close of trading on Friday, December 30, dipped by N1.99 trillion or 21.5 per cent in 23 months, tumbling to N9, 246 trillion against N11, 237 trillion recorded on January 5, 2015. Also, All-share index also slid by 7068.67 points or 26 per cent from 33,943.29 to 26,874.62.
Embittered by the outrageous losses suffered by stock market investors, stakeholders blamed the development on government’s unfavourable policies and neglect of the market.
They therefore called for an integrated blueprint that would boost liquidity in the stock market and unlock rapid infrastructure development in the country to ease production costs of listed firms.
Aside attributing the market depression to inauspicious policies, the stakeholders said this has also eroded investors’ confidence in the market.
Other factors identified as impediments to market growth are the parlous state of the nation’s infrastructure, scarcity of foreign exchange (forex), high rate of inflation, lack of liquidity, dearth of incentives and investors’ education and a host of others.
Furthermore, they suggested that government should resolve the myriad of security related issues in Nigeria, and improve global perception of the country as an investment destination.
Furthermore, the stakeholders, who are currently groaning under intense economic hardship, decried the high cost of borrowing in Nigeria, noting that if firms can easily access single digit credits, it would go a long way to increase their profitability for good dividend pay-out.
The long reign of bears has become a cause for concern to both retail and foreign. For retail investors the continuous depreciation in stock prices became a justification for their apathy to investing in the stock market.
Reacting to the performance, an independent investor, Amaechi Egbo, said the market largely underperformed in 2016 due to general decline in Nigeria’s macro-economic variables such as gross domestic product, GDP, earnings and revenue among others.
He said: “Government should resolve the myriad of security related problems and reassure portfolio managers of safety of lives and investment.
“Government should improve the state of infrastructure to help both listed companies and others achieve healthier bottom-line. Critical to the improvement of the stock market is for economic managers to remove distortions in the forex market and prioritise company access to forex for production.
He added: “The market can improve in 2017, if the regulators granted more incentives and reward for performance, while government agencies should strive to eliminate multiple taxation.”
The Managing Director of Crane Securities, Mike Ezeh, attributed the persistent lull in the market to investors’ apathy and loss of confidence.
According to him, “Massive enlightenment seminars and conferences should be embarked on by the regulators to enlighten the investors on the rudiment of stock investment.
Decrying the neglect of the market, he stressed the need for government to support and participate on the market, saying: “Government, which should be the biggest participant, pretends to be ignorant of the enormous importance of bourse to economic development.”
The National Coordinator, Proactive Shareholders Association of Nigeria, Taiwo Oderinde, stressed the need for harmony and collaboration among market regulators.
“Our stock market started with about N13 trillion capitalisation until there was a crash on the global crude oil price, which indirectly affected the stock prices. The market capitalisation crashed to about N9 trillion in December 2016.
“Also, there should be investors’ education from these regulatory authorities as was done in the past. The way out is to have investors’ conferences among others to encourage and educate the stakeholders for the benefit of the market. The 2017 budget should focus on pumping money into some sensitive areas of the economy. Finally, our government at all levels should be people-oriented.”
The President of Renaissance Shareholders Association, Olufemi Timothy, said the Nigerian Stock Exchange (NSE) fell below investors’ expectation especially the retail holders. “The market needs to come out to really woo local investors,” he added.