Kayode Ekundayo
7 July 2008
Lagos — The Minister of State for Finance Mr. Remi Babalola, Governor of Central Bank of Nigeria (CBN) Charles C. Soludo, Director General of the Nigerian Stock Exchange (NSE) Mrs. Ndi Okereke-Onyiuke, all the chief executive officers of the 24 banks in the country and other stakeholders held a crucial meeting on how to rescue Nigerian capital market from crashing.
The presidency has been unsettled since past few weeks as a result of downward trend of stock prices.
The market capitalization which rose to N12 trillion early in the year plunged to N10 trillion late last month, raising fears that the market may crash.
But, rising from a three-hour meeting on Friday in Lagos, the Minister of State for Finance Mr. Remi Babalola reaffirmed the confidence of the federal government in the capital market, emphasizing that there was nothing wrong with the market as all the fundamentals of good capital market are still intact.
Mr. Babalola said the market is still robust and strong, adding that the meeting with the banks' chief executives has shown that there is prosperity in the Nigerian stock market.
He said the federal government is addressing those infrastructural problems such as lack of electricity and good roads, emphasizing that with the current state of the nation's economy; it is time for the foreign direct investment to enter into the country.
On the margin loan withdrawal by the CBN, the governor Charles Soludo blamed the media for reporting rumours, adding that there was no time the CBN or anybody made statement on such issue.
"The point to be made here is that I don't know where the rumours came from I only read it in the papers. I have clarified the issue several times. There was no basis to ask the banks to stop given loan to investors for the purpose of share purchase. It is not the duty of CBN to prescribe for banks what sector they should give loan. Even the stock exchange has not stopped it from happening," he said.
Soludo who read the communiqué of the meeting said the meeting which also include the Director General, Securities and Exchange Commission (SEC), Musa El-Faki, stated that all the stakeholders agreed to strengthen the regulatory framework that govern the operations of the capital market in order to make it grow.
CBN Governor also explained that all the regulatory agencies; NSE, SEC, CBN and the Nigerian Deposit Insurance Company (NDIC) would continue to collaborate to maintain the prospects of the market.
"We equally need to educate Nigerians about the volatility of the market. Volatility is part of the market activities world wide. The regulators will ensure that the market does not crash", he said
He noted that investors need not to panic, adding that since last week the market has gained over N1trillion, moving to N11 trillion from N10 trillion it was few weeks ago.
Soludo said all the various stakeholders at the meeting have taken note to sustain the market.
"Volatility is a major factor in the market world wide. The problem is that Nigerians have used to linear growth market but stock market is not like that", he said
On her part, NSE Director General Ndi Okereke-Onyiuke said there was no time margin trading was suspended.
She explained: "What happened was that we asked the stockbrokers to change the name to custody accounts but since margin trading is known very well in Nigeria, we have written back to the stockbrokers to accept it as margin trading. The whole problem is all about the use of words."
Others present at the meeting were the chairman of NSE, Oba Otudeko, Managing director, NDIC, Ganiyu Ogunleye and other major stakeholders in the finance industry
Before last week market capitalization has dived to less than N10 trillion while All-Share-Index also dropped to less 54.205.72 points. This was against what was experienced early in the year when market capitalization zoomed to over N12.5 trillion while All-Share-Index up to over 60.05 point.
Be the first to Write a Comment!
Copyright © 2008 Daily Trust. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
