The Managing Director of Partnership Investment Company Limited, Mr. Victor Ogiemwonyi has said the rising level of insecurity in the country would continue to negatively affect the growth of the capital market.

Ogiemwonyi said this at the bi-monthly discourse of the Financial Correspondents Association of Nigeria (FICAN) in Lagos.

According to him, the sectarian violence, tension and killings that had been on the increase since last month, would continue to dampen the confidence of both local and foreign investors.

The stockbroker also argued that the Euro crisis may also retard the growth of the capital market this year, if not addressed timely.

Ogiemwonyi also said the country was currently facing a high level of capital flight, and declining interest of foreign investors in the economy, largely, due to the euro debt crisis. This, he argued, had continued to slowdown the growth of the Nigerian Stock Exchange (NSE) All-share Index and market capitalisation.

The Partnership Investment boss explained: "We have suddenly realised that we are part of the global community and whatever happens in any part of the world, affects us. The sovereign debt in Europe has also shown us that we must be very careful on how we build our own debt because of the issue of default. What is happening in Europe shows that there is need for everybody to be worried whenever our debt starts growing again.

"The level insecurity has increased and hampered investors' confidence in the country. Don't forget that the stock market is a barometer for measuring a country's economy and if the economy is not growing, then the stock market will also not grow. And it means that if you have an economy that is not growing sufficiently, then the stock market will not grow. The insecurity in the country affects foreign Direct Investment and investors' confidence. This is because, crises, brings uncertainty, which also affect investors' confidence."

In addition to the current security threats facing the country, Ogiemwonyi also argued that the multiplier effect of the increase in pump price of petrol would be imported inflation. This, according to him, would deprive stock market investors of real value for their investment.

Commenting on the 2012 outlook for the stock market, Ogiemwonyi, predicted that move to review the high recurrent expenditure of the 2012 appropriation bill, the intervention by the Asset Management Corporation of Nigeria (AMCON) and the reforms in the banking sector last year, would all impact positively on the capital market this year.

He also insisted that as a result of the reforms, commercial banks are now better positioned to fund critical sectors of the economy. According to him, further privatisation of some public corporations will equally boost the market confidence and ensure efficiency in the system. In addition, he also said that both local and international investors had confidence on the federal government's economic management team.