Lagos — Some relief came into Nigeria's stock market yesterday after the intervention by government and stakeholders on Tuesday to stop its continuous fall.

But experts and investors have been commenting on the overall health of the market and the efficacy of the recovery measures announced two days ago.

From the 2.2 per cent loss, amounting to some N200 billion on Monday - described as the highest daily loss - the market gained N280 billion, representing a 3 per cent rise yesterday. A total of 72 listed companies made price gains, 57 of them recording the maximum gain of 5 per cent.

At the end of trading yesterday, the All Share Index rose by 3.1 per cent from 43.19 trillion to 44.57 trillion. Similarly, market capitalisation rose from N8.808 trillion to N9.08 trillion, an increase of about 3.1 per cent.

The recovery plan announced yesterday included 20 per cent buy-back of shares by companies; reduction of market operators' fees; introduction of a capital market stabilisation fund; review of the country's liquidity situation; and a review of trading rules.

The new trading rules reviewed the band for daily price movements - a reduction of the five per cent maximum downward limit to one per cent, and the retention of the five per cent upward movement.

Averagely, market capitalisation had been on the rise from the inauguration of President Umaru Musa Yar'Adua in May 2007, peaking in March this year at N12.6 trillion. From then, it has been on a downward slide. As at Tuesday, it had reached a low N8.8 trillion, representing a 30 per cent loss or N3.8 trillion. The All Share Index declined from 66,116.56 to 43,119.47, representing 31.4 per cent loss.

Yesterday, Finance Minister Dr. Shamsuddeen Usman reaffirmed that the intervention was a "quick fix" to stem the slide in market prices. He promised that the 16-member Presidential Advisory Team would meet regularly to develop medium and long-term measure to stabilise the market.

Addressing concerns about the efficiency of the share buy-back measure, the Minister said its application would be "in line with the law and best practice".

He said it would also be subject to approvals of the Securities and Exchange Commission, which will specify conditions to be met. The conditions include the requirement for such companies to be quoted and also to be liquid. They also have to disclose to the public that they are buying their own shares.

The Attorney-General of the Federation, Chief Mike Aondoakaa told THISDAY yesterday that amendments of necessary laws would be made through National Assembly, and that it would be done as soon as the President returned from his trip to Saudi Arabia.

However, some stakeholders yesterday expressed reservations over the measures, describing them as medicine for temporary relief.

The chairman of a bank noted that the people that lead the market are always the ones that manipulate it.

He hoped that shares bought back from the market would be liquidated by the quoted companies. "It defies all logic if they buy and hold the shares," he said.

Commenting on the 1 per cent limit to price fall, he warned that it would make the sale of shares difficult and affect the total volume of transactions.

Jibola Odedina, of Marina Securities Limited, supports the 1 per cent limit, describing it as a measure to forestall sudden price falls that could shock the market.

But a bank chairman advised that measures to stem the tide can only yield desired results if they are sustained.

Beyond these measures, the chairman wants the advisory body to look at the fundamentals of the problem.

Noting that the basic problem is loss of confidence in the market and the economy in general, he called for full investigation into the loss.

He said confidence in the economy and Nigeria soared during the inauguration of the President in May 2007, particularly on account of The President's inspiring inaugural address. Whatever had gone wrong, the bank executive said, should be rectified.

Also speaking on how to regenerate confidence in the system, a seasoned economist said investment in the market was about hope in the future - hope that the investment was not only safe, but would grow in added value.

"Investors need their confidence buoyed," he said, expressing the need for the Economic Management Team to communicate the state of the economy more to the people.

On the proposed measure to review liquidity in the system, he said it may not be the issue now because already there is N400 billion excess liquidity in the system.

But Odedina, who believes the package of measures is capable of restoring confidence in the market, suggests a little investment in the stabilisation fund will help in delivering the desired results. He also believes that the market makers to reduce wild fluctuations in market prices could be found from among existing stockbrokers.