The sterling performance of most quoted companies in the last few months is an indication that the nation’s capital market is not just on the rebound but is a morale booster for prospective investors in the sector, analysts have said.
One of those who holds this view and very strongly too is Alhaji Atiku Kafaru, a capital market analyst.
Kafaru, who sits atop as Managing Director, Camry Securities Limited, is, however, persuaded that a lot can be done to get the market where it is supposed to be: at the very top.
In Kafaru’s view, this can be done in one of three ways.
He said “One way to fully restore investors’ confidence is to carry out continuous sensitisation/investors education. The second thing will be timely and accurate release of information from companies and stakeholders, and thirdly these companies where these investors had their money should also be kind enough to give good returns to their investors.,”, .
Continuing, he said “It is just very unfortunate that the problem between the National Assembly has not been resolved. I know every year that investors education budget is put together to let them know how their capital market will work; to let them know that it is a market for long-term investments, the benefits, the pros and cons because you need to be familiar with the terrain where you are working so that you don’t fall into leakage.
“This investor’s education is very important. It has been done in the past. I remember in those days when we travelled abroad to look for investors, especially in the United State, United Kingdom and all that, and you are seeing the benefits, and that is why our market has been dominated by foreign investors, as a result of their effort of the pasts. These efforts should also be continued because there are lots of potentials these foreign investors are seeing in our market, that we that are here as local investors are not seeing and they are making money in our market. So we need to sensitise and educate our investors and let them see those opportunities,” he stressed.
On the issue of timely information, the analyst said, “The information we get serves a lot of benefits. For instance, it tells us the results generated by the company, its projections, and what are they doing currently. All these information, when you collate them together, it will defininately make or mar the price of such a stock. But where all these information are not available, goods will be traded on rumour, and rumours can have negative impact. So the company should be ready to give information to the market as at when due. When you give that information as at when due, people will now analyse these information based on other things that are on ground, and this will affect the company and the goods. If good information about the money that is available to stakeholders is not made known to the market, people will not know the money that is available to them. But if people are now well informed that this is why this is like this.”
Commenting on the tendency by quoted companies filing false results in order to show that they have a clean bill of health, he said this is against the principle of good corporate governance.
“We also need to let these companies know that part of their duty is to be fair, and just to their investors in the sense that you try at all cost so that at least our bottom line can be ok. If the bottom line is ok, you will have enough to give to your stakeholders as return on their investments, either in dividends in terms of money or in terms of shares, bonuses. But if a company is not doing well, there is nothing to give. When you make money as a company, share this money with your investors so that they can have more confidence in your company. But if you are not giving them anything they may look for other ways. If companies yield to these three points, they may bring back that desired company back to the market.”
Expatiating, he said, there is an extent to which a company can manipulate the investing public.
Citing the case of Cadbury, where some of the top hierarchies of the management were involved in some shady deals, Kafaru said at the end poetic justice prevailed.
“The issue of Cadbury the matter has been discussed extensively in the areas that are really concern and appropriate steps have been taken if they were sanctioned, the state sanctioned them and directors involved were punished up to the registrar. So I don’t think that there is any other way they can do better than that. On the issue of A.P, I think it was maybe because of change of management or whatever that really affected them but I think for now AP has return to profitability and I think we need to also give more information to the market regarding what they are doing. You see like I told you earlier you are doing something and you don’t allow people to know what you are doing, it will definitely affect the performance. Information is very key, and the issue of manipulation, there are mechanisms and appropriate sanctions for everything you do in the market, if you err they are there to punish you, and if you do it right, there is a way of saying. There is a bank in this country that people still trust till tomorrow, come rain come sunshine people trust them because they know they will not do anything wrong. And there are some companies, if people want to go and invest, they will say they should not go and put their money there. So these are issues, if you are doing it right, definitely something good is awaiting you, but you should continue to do what is right and just. So the issue of manipulation I don’t foresee it in this market, because all the necessary regulatory sanctions are in place. Even there is something in the stock exchange they call the whistle blower, before you even do it, you will be caught so the issue of manipulation do not need to arise, so there are lots of innovations that have been done. So the issue of fraud I don’t foresee it in our market.”
