29 January 2018

Nigeria: 'How to Sustain Stock Market Rebound Through Stable Polity'

Ahead of the 2019 polls, stakeholders in the nation's capital market have stressed the need for government at all levels to adopt appropriate pragmatic strategies that would aid peaceful campaign and stability of polity to ensure sustainable market rebound.

The stakeholders who argued that market is information driven, explained that with the little signs of recovery and capital appreciation witnessed in the market in recent times, government at all levels, including the citizenry must be cautious and avoid any actions and decisions that could send wrong signals and erode investors' confidence in the market.

Indeed, the nation's capital market has witnessed unprecedented rebound. After posting an outrageous 26 per cent loss in 2016, the Nigerian equities market gathered strong momentum in 2017, with an increase of N4.5 trillion in market capitalisation from N9,158 trillion at which it opened the year on January 3, 2017 to N13.519 trillion as at December 28, 2017. The All-Share Index (NSE ASI), rose by 43 per cent during the year under review from 26, 616.89 to 37,990.74.

The rally extended to the current financial year, as market capitalisation of listed equities which stood at N13,617 trillion as at January 2, 2018 rose by N2,074 trillion or 13.2 per cent to N15,691 trillion as at Friday, January 26, 2018.

Similarly, the All-share index which opened the year 2018 at 38,264.79 rose by 5,508 points or 12.6 per cent to close at 43,773.76 .

According to them, any perceived violence in the country may trigger panic and massive dumping of shares, especially from the foreign investors, which would ultimately have a multiplier effect on the nation's economic growth.

Therefore, they suggested that law enforcement agencies should be more proactive and identified all flash points, trouble spots and other perceived violence vulnerable areas and ensure that a robust and elaborate security arrangement is implemented to forestall any breakdown of law and order.

Furthermore, the stakeholders added that these measures be adopted early enough to avoid the usual 'fire brigade approach to issues'.

For instance, the Chief Research Officer of Investdata Consulting, Ambrose Omodion, in an interview with The Guardian said: "From April, we will start seeing the activities of these politicians in full force and if what foreign investors are seeing is not conducive despite the good numbers the listed firms' presents, they will exit and stay on the fence while equities will start nose-diving because they are the one that is pushing the market presently."

The Managing Director of Highcap Securities, Imafidon Adonri explained that political development would shape and reshape the capital market as events unfold for the 2019 polls.

According to him, the onus rests on the politician and those that are in charge of governance to establish a stable polity and ensure that that the environment is not overheated to sustain market recovery and economic growth.

"Those who control the polity, especially the politicians and the executives need to be upright and follow due process and perform well so that the polity will be calm going into the election, they do not need to over heat it.

"They need not to come up with frivolities that will cause conflict and crises because those are the things that affect the capital market. Secondly, the rally we have witnessed so far is as a result of positive development in the macro economic indices.

" Currently the indices has been positive, so they have impacted positively in the market and also in the listed companies' performance while the fundamentals of the market is getting stronger.

"So the expectation is that some of the listed companies will come up with impressive full year result and that the distributions will also surpass what they did in previous years, so if the distributions are impressive, that means that the price rally we experienced recently can be defended into the foreseeable future if stable polity is created."

Corroborating his view, the Managing Director of Pivot Capital Limited, Dare Adejumo said: "The atmosphere needs to be conducive because our market is driven by foreign investors.

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