Oscar Onyema is urging investors in Nigeria to take advantage of the low prices of stocks now and invest more in the capital market
| By Anayo Ezugwu | Dec. 15, 2014 @ 01:00 GMT |
THE 2014 FCSL Asset Management Limited investors’ forum in Lagos, provided the Nigerian Stock Exchange, NSE, the opportunity to woo Nigerian investors to the stock market despite the slide in the value of stocks. According to Oscar Onyema, chief executive officer, of the Nigerian Stock Exchange, NSE, investors should exploit the opportunities in the capital market now and invest more. Investment in the Nigerian capital market will boost the fortunes of individual investors and the country’s economy, he said, adding that this was the best time to invest in the Nigerian capital market.
“We have restored confidence in the system through introduction of corporate governance, which allows companies to do business in a transparent and sustainable manner. Investment in the capital market is long term and it is one which requires the attention and the support of parties concerned to grow,” he said.
Instead of seeing the slide in the market as a negative development, Onyema advised that: “investors should know that the capital market is a cyclical market with up and down movements. The market is full of risks. I encourage investors to seek professional advice from investment specialists and stockbrokers that will be able to manage their investment in the market. Also, investors can personally manage and monitor their investment portfolios in a manner that will reduce risk and improve returns. Investors have to adopt appropriate techniques in making investment decisions because the capital market is not for gamblers, it is not a game of chance but a game that requires informed decision,” he said.
Similarly, Lekan Belo, managing director, FCSL Asset Management Limited, said the company organised the forum as part of its commitment to stimulate the interest of the investors in the capital market, and also help to create increased investment and financial awareness in the economy.
Supporting him, Asue Ighodalo, chairman, Sterling Bank Plc, listed challenges facing the capital market to include technological limitation, lengthy/cumbersome deal execution/implementation, prohibitive pricing (both transaction costs and cost of funds), low financial literacy levels and doubtful transparency among others. He said that the Federal Inland Revenue Services, FIRS, must not consider every tax-exemption proposal as “reducing its take.”
Ighodalo, who commended the development of Alternative Securities Market, also called for considerable improvement in financial literacy, modification of current strict rules-based compliance approach, enhancement and deployment of technology at all levels including the Securities and Exchange Commission, Nigerian Stock Exchange and operators.
The promptings by the capital market specialists sounds hollow against the background that the NSE lost N1.822 trillion to capitalisation in the last 11 months as the market succumbed to forces within local and international financial markets.
According to the information at NSE website, the market, which opened the year with a capitalisation of N13.226 trillion closed at N11.404 trillion on November 28.
This decline in market value followed recent massive equities sell-offs that was triggered by exit of foreign investors and local investors as a result of falling oil prices, and political and economic uncertainties in the country.
The Nigerian market put up an impressive performance in the last two years and a moderate growth was expected this year, the huge decline recorded in the last one month was least expected.
Most of the losses recorded in the last 11 months came in November alone. For instance, the market dipped by N1.4 trillion in the first week of the month alone. However, low valuations attracted some investors back to the market, which later moderated the overall loss to be at N1.8 trillion as at the end of November.
Contrarily, this time last year, the market was already boasting of a growth of N3.543 trillion in capitalisation or 39 per cent. However, the market is heading for a negative close this year with just one month to end the year. According to NSE, preparations for 2015 general elections have shifted government attention away from the economy.