Kayode Ekundayo with Agency Report
12 January 2009
Prof. Ndi Okereke-Onyuike, Director-General of Nigerian Stock Exchange (NSE) has said that the refusal of Federal Government to intervene in the capital market crisis was responsible for the continuing fall in the prices of stocks.
Okereke-Onyiuke, who was reviewing activities on the NSE in 2008 in Lagos yesterday said that the non-intervention of government in the crisis was now a major obstacle to rebound of prices of equities on the exchange.
She alleged that bureaucrats misled the Federal Government against intervening in the crisis unlike what happened in some developed markets.
"Nigerians are parochial in their approach to national issues, especially on the true situation in the Nigerian capital market. It is our usual approach that once we are not in charge, we make every effort to pull down people for selfish reasons.
"Government's pronouncement not to bail-out the market, even before stakeholders concluded their meeting on the way forward, showed that it did not appreciate the problem," she said.
The NSE Director-General said that the organised private sector was still collaborating to find sustainable financial bailout plans for the market.
She, however, said that the NSE had not shut its doors to any assistance from government in the bid to restore investors' confidence to the market.
Okereke-Onyiuke said that five firms had accepted to play the role of "liquidity providers" in the market, which she said, had lost about N3 trillion to stock price depreciation.
She declined to provide details on the "liquidity providers" but said that they had started dialogue with the Minister of Finance on issues affecting the financial industry, especially the capital market.
The NSE Director General said that in spite of the effects of the global financial crisis, the NSE recorded a turnover growth of 39.85 per cent and 14.3 per cent in volume and value terms in 2008.
She said that the market capitalization dipped by 28.1 per cent to N9.56 trillion or $80.6 billion compared with N13.30 trillion or $105.65 billion achieved in 2007.
The All-share index also fell by 45.8 per cent to 31,450.78 points in 2008 from 57,990.22 points recorded in the preceding year.
A further analysis of market showed that while the number of listed companies at the exchange appreciated by 0.5 per cent the number of listed securities fell by 2.6 per cent in 2008.
Meanwhile, the five market makers registered by Securities and Exchange Commission (SEC) few weeks ago are yet to resume operation in the market.
According to director general of the exchange, it is the responsibility of NSE to license them and the license would be issued only when they have provide information about their liquidity providers
It would be recalled that SEC, as part of measures to ensure adequate liquidity in the market, gave licenses to five companies as market makers.
Market makers precisely are wholesale operators who create liquidity in the stock market by either buying shares when there is a glut or selling shares when there is scarcity.
"They have to be licenced by us. We will issue them licences only when they keep to the requirements of the exchange. Parts of the requirements are to provide information on their liquidity providers, banks and other non bank financial institutions and the stocks in which they plan to make market before they are licensed to operate as market makers
"We hope they will be able to meet these regulatory conditions in January to enable them commence operation during the first quarter of 2009", she said
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