Princewill Ekwujuru
6 November 2008
The Nigeria stock markets not facing any economic crisis as being witnessed in the global economy as it is only re-acting to stimulus, says managing director, Lead Capital Limited, Mr. Abimbola Olashore, Managing Director.
Speaking at Tom Associate Education Centre, an organised talking business show, with the theme, "The crisis in the financial and capital markets" last week, he stated that the Nigeria capital market is only behaving normally, while reacting to stimulus adding that the Nigeria financial system cannot but react according to what is being witnessed in other parts of the world.
According to him, " That is not to say that the Nigeria stock market is witnessing a meltdown as insinuated in some quarters of the market. The Nigerian stock market recently is witnessing crisis of confidence, the outcome of which has led to panic in spite of the excess liquidity in the banking system, which culminated into massive credit expansion which was largely deployed to the stock market for share acquisition Furthermore, manipulation of stock prices upwards by institutions, ahead of their capital raising exercises also fuel the market to an unprecedented height."
He stressed that the result has led to abdication of fundamental analysis and focus on trends and statistical models.
In addition , he averred that with the rush for shares , it led to predatory lending; indiscriminate extension of credit to the investing public' mostly to the naive and those who lack income stream to services debts, in the guise of product offering and further the seeming laissez faire approach to the bubble building up in the capital market by regulators.
Olashore , stated that when a particular section of the market is troubled does it does not mean that the whole market is sick, he noted further that the only troubled sector in the Nigeria stock market is the banking sector which is presently witnessing the global economic crack down, a situation that has made it impossible for investors in that circle to sell their investments.
He stressed that before now what had driven and triggered the growth in the Nigerian stock market had been political activities, oil and gas, but now that the oil price is falling, there is now doubt that the market would not witness some skirmishes.
On the other hand ,Olashore stated that even though the market is witnessing downward trend "this is the right time to invest in the stock market", because surely the market would bounce back soonest".
He stated that even though the crisis in the world market has created fear in investors, the damage has been done, which has lead to lost in investors confidence, but he stressed that the longer the lack of confidence the more difficult the rebound.
Olashore observed that at market level, good regulation will avoid another similar crisis and will help restore investors confidence.
Be the first to Write a Comment!
Copyright © 2008 Vanguard. 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.
