The Nigerian Stock Exchange (NSE) has issued a circular to stockbrokers warning them against a breach of the extant capital market rules which prohibit brokers from providing any guarantee on quoted shares, or other securities.
The circular, obtained by The Nation at the weekend, came on the heels of a guaranteed investment scheme that involved a leading stockbroker. Preliminary investigations by the NSE and Securities and Exchange Commission (SEC) have established that the troubled stockbroking firm, Partnership Securities Limited (PSL), breached the extant capital market rules and engaged in illegal activities that led to estimated loss of about N4.8 billion by some 300 investors.
Citing its rulebook, The Exchange stated that guaranteed investment scheme is prohibited by the Rules of the Exchange, warning that it would impose sanctions on any erring stockbroker.
According to the dealing members’ rules, rule 1.15 that deals with prohibition of business relationship based on guarantee, Rulebook of the Exchange, 2015, dealing members of the Exchange shall not “enter into any business relationship with a client premised on a guaranteed return to the client.”
The rule 1.15 also forbids dealing members from “guarantee, directly or indirectly, a customer against loss in any account or in any securities transaction executed by the dealing member for such customer, or previously agreed with the customer on a profit margin”.
Violation falls under engaging in illegal activities and transactions under such activities could be deemed unauthorised transactions. Such violations carry wide-ranging fines and sanctions under the rules of the market, including monetary sanction, revocation of dealership license and cancellation of stockbroking license.
Partnership Securities, owned by Mr. Victor Ogiemwonyi, a leading stockbroker and council member of the Exchange, is embroiled in a shares investment scandal. Some 300 investors had alleged that they were allegedly swindled of more than N4.8 billion in investment schemes promoted by Partnership Securities Limited. Representatives of the investors alleged that they were approached by Ogiemwonyi to surrender their shares to him for management under his Partnership Securities Deposit Account (PSDA) with a promise to provide a guaranteed return periodically. Shares worth more than N4.8 billion were misappropriated through this scheme.
Some of the other victims included Mr. Godwin Anono, Chairman, Standard Shareholders Association of Nigeria with over N160 million worth of shares, Mr. Alabi Olusola with over N12.540 million worth of shares; Mr. Solesi Samuel with over N40 million worth of shares and a widow with over N4 million worth of shares among others.
Narrating his ordeal, Mr. Alabi Olusola said Ogiemwonyi called him to deposit his shares, which had not been traded over the years, in the custody of his stockbroking firm to manage those shares and generate 10 per cent returns, which would be paid to Alabi twice a year.
“The deal was such that I can back out at any time I wish. When in 2014 the returns were not forth coming, Ogiemwonyi started giving one excuse or the other; that the returns are being reinvested, it was then I realised that he was playing foul, hence I demanded for my shares which could not be returned to me,” Alabi said.
The Exchange had on October 18, 2016 suspended PSL from trading on all its floors nationwide.
Tag: Stock Exchange
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No guarantee on equities, Stock Exchange warns brokers
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Stock Exchange urges NIPCO to list shares
The Nigerian Stock Exchange (NSE) has urged the directors of NIPCO Plc to consider listing the indigenous oil and gas company on the stock market in order to enhance its competitive advantage and deepen its access to long-term capital.
Chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said the board of NIPCO should consider listing the shares of the company because of the several benefits inherent in listing on the stock exchange.
According to him, listing NIPCO on the NSE would give more credibility to the company and attract more shareholders to the company, thus enhancing its ability to raise large capital.
He noted that beside the flexibility to raise capital, public quotation also help in enhancing corporate governance and sustainability of the business.
Onyema, who paid a courtesy visit to NIPCO in Lagos, praised the recent acquisition of 60 per cent stake in Mobil Oil Nigeria by NIPCO noting that NIPCO has the ability to ensure continuous investors interest in the capital market.
He described the acquisition deal as one of the largest acquisitions in the Nigerian downstream sector, adding that the strategic acquisition will no doubt enhance the company’s continuous growth and expansion in Nigeria as well as add increased value to investor and other stakeholders.
Nipco had agreed to pay $301 million for the acquisition of ExxonMobil Oil Corporation’s 60 per cent majority equity stake in Mobil Oil Nigeria Plc. The total consideration of $301 million, which is subject to price adjustments for dividends and other factors, is equivalent to N91.88 billion at current official exchange rate of N305.25 per Dollar.
Under the deal, ExxonMobil will sell its majority equity stake of 60 per cent to Nipco Investments Limited; a wholly-owned subsidiary of Nipco. ExxonMobil will transfer its total shareholding of 216.36 million ordinary shares of 50 kobo each to Nipco Investments Limited for the consideration of $301 million.
“So we think it is a good development for the company, it also gives great potential for indigenous company to get global visibility,” Onyema said.
In his remarks, Managing Director, NIPCO Plc, Mr Venkataraman Venkatapathy said the transition period for the Mobil acquisition will enable NIPCO to effectively manage a smooth and successful completion of the transaction.
He assured that NIPCO considers the acquisition as an important synergy. -
Med-View Airline to list N15b shares on Stock Exchange
The council of the Nigerian Stock Exchange (NSE) has given approval to Med-View Airline Plc to list its entire issued share capital on the Exchange, in a move that will see the return of the airlines industry to the stock market after the delisting of the previous carriers.
Regulatory documents obtained by The Nation at the weekend indicated that the Quotation Committee, which oversees listing at the Exchange, has approved the listing of Med-View Airline.
Med-View Airline will be listing 9.75 billion ordinary shares of 50 kobo each at N1.50 per share, indicating a start-off market capitalisation of N14.63 billion. Trust Yields Securities Limited and Kedari Capital Limited, two investment firms, were said to be working with the board of Med-View Airline to facilitate the listing.
The listing will be done by way of introduction, implying that Med-View Airline will be available initially through the secondary market, though the airline was said to be interested in floating its initial public offering (IPO) as the market condition improves.
A source in the know said the listing of the airline might be in the first quarter of 2017.
Two other aviation-related companies are listed on the NSE. Airlines Services and Logistics, an in-flight catering company, is currently trading at N2.50 while Nigerian Aviation Handling Company (Nahco), a ground-handling company, trades at N3.16 per share.
From its humble beginning in 2007, Med-View Airline has grown to become an emerging major domestic airline. The coming of Med-View airline into the Nigeria scene came with Hajj operations in year 2007 shortly after its incorporation, as a litmus-test, and changed the whole concept of pilgrims airlift in Nigeria.
The remarkable performance in airlifting passengers earlier than expected during Hajj 2007-2008 was said to have impressed the authorities of National Hajj commission (NAHCON), which subsequently called on the newly incorporated airline to carry out rescue operations for pilgrims stranded in Ilorin, Lagos, Sokoto, Maiduguri and Yola during outbound to Saudi Arabia and those stranded in Saudi Arabia during inbound to Nigeria.
Med-View Airline second time participation in pilgrims airlift, 2008-2009 Hajj operations, witnessed another commendable performance and it also carried out rescue operations for the stranded pilgrims under the auspices of NAHCON. In 2009, Med-view Airline started participating in Umrah (lesser Hajj) operation.
Med-View Airline commenced domestic operation in November 2012 with a fleet of two Boeing 737-400 aircraft. It added another Boeing 737-800 just a month after.
“Med-view Airline is an emerging giant in the comity of reputable carriers in Sub-Sahara Africa. Our partnership with Euro-Atlantic Airways of Lisbon, Portugal, coupled with General Sales Agency (GSA) agreement with Saudi Air Cargo, our blossom business relationship with Pluna Air of Uruguay and Air Atlanta of Iceland combined to set a standard in Aviation industry yet to be beaten,” the company stated in its profile.
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Stock Exchange approves N218.6m new capital raising for DN Meyer
Authorities at the Nigerian Stock Exchange (NSE) at the weekend approved the plan by DN Meyer Nigeria PLC to raise about N218.62 million in new equity funds from existing shareholders. The move will double the paid up share capital of the paint manufacturing company and raise total equity funds to above N900 million.
A regulatory approval obtained by The Nation at the weekend indicated that DN Meyer Nigeria plans a rights issue of 291.49 million ordinary shares of 50 kobo each to shareholders on the register of the company as at Thursday September 8, 2016 at a price of 75 kobo.
The provisional allotment will be done on the basis of one new ordinary share for one ordinary share held as at the close of register on September 8, 2016. The rights issue price is a discount of about 10 per cent to DN Meyer’s share price of 83 kobo at the NSE.
The latest audited report and accounts of DN Meyer for the year ended December 31, 2015 showed a turnover of N1.19 billion in 2015 as against N1.34 billion in 2014. Gross profit dropped from N592.24 million in 2014 to N505.38 million. Operating profit however improved from N72.01 million to N151.01 million. The company returned to profit in 2015 with a pre-tax profit of N60.46 million as against pre-tax loss of N37.36 million recorded in 2014. After taxes, net profit stood at N52.86 million in 2015 as against net loss of N36.58 million in 2014. Shareholders’ funds closed 2015 at N685.28 million as against N632.03 million in 2014. DN Meyer currently has a paid up share capital of N145.75 million consisting of 291.5 million ordinary shares of 50 kobo each.
In the 2014 audited report, the external auditors to DN Meyer, Akintola Williams Deloitte, had expressed concerns about the going concern status of the chemical and paints company as recurring losses over the years and inability to inject additional equity funds built up huge deficit on the balance sheet.
A new external auditors, BDO Professional Services, signed on the audited report for 2015 without any material emphasis or doubt on going concern.
In the 2014 report, the external auditors noted that recurring losses and negative working capital plaguing the company “indicates existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern”.
The auditors particularly drew attention to the fact that the DN Meyer group has sustained recurring losses over the years and recorded negative working capital. In the year ended December 31, 2014, the company posted a loss of N44.2 million while it also has a negative working capital of N161 million by the December 2014 year-end.
Audited accounts of DN Meyer Group had shown that the company suffered a reversal in 2014. Turnover dropped from N1.59 billion in 2013 to N1.34 billion in 2014. As against pre-tax profit of N51.9 million in 2013, the company recorded a pre-tax loss of N37.36 million. After taxes, net loss stood at N35.58 million in 2014 as against net profit of N47.07 million in 2013.
The board of the company, however, said the operations of the company have been improving and it will be in adequate position to generate needed cashflows in the years ahead.
Auditors at Akintola Williams Deloitte had earlier in an independent audit report dated August 2013, highlighted the possibility of the working capital deficiencies and negative cash flow impairing on the sustainable operations of the company. Negative working capital had risen by 11 per cent to N181 million in 2012 as against N163 million and N60 million in 2011 and 2010 respectively. Besides, the group recorded negative operating cash flows of N34 million in 2012. The board of the company blamed the legacy loans and the attendant financing charges for the continuing negative bottom-line of the company.
One of the legacy companies, DN Meyer, has history of more than seven decades and was an iconic brand in its industry. Before its incorporation in 1960, it had operated for two decades. It converted to public limited liability and listed its shares on the Nigerian Stock Exchange (NSE) in 1979. In 1994, the then Dunlop Nigeria acquired majority equity stake of 68 per cent in the company and thus changed its name from Hagemeyer Nigerian Plc to DN Meyer Plc. In 2003, DN Meyer acquired the flooring and adhesives business of Dunlop Nigeria, thus extending its business operations from manufacturing and marketing of paints to adhesives and floor tiles.
Dunlop sold its stake in DN Meyer in 2004 to ACIMS Limited and the Nigerian public through a combination of management buyout (MBO), thereby making DN Meyer a wholly Nigerian company. ACIMS sold its total equity stake in DN Meyer to Citiprops Limited in February 2010.
DN Meyer is now owned by some 8,000 shareholders.Recent shareholding analysis showed that three shareholders held the largest stakes-Citiprops Limited held the largest 30 per cent equity stake, Bosworth Limited held 12.89 per cent while Mr Osa Osunde held 9.26 per cent.
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Stock Exchange names Capital Assets best stockbroking firm
The Nigerian Stock Exchange (NSE) has conferred its prestigious “Most Compliant Dealing Member Firm” award on Capital Assets Limited, a Lagos-based indigenous full-service capital market operator.
The “Most Compliant Dealing Member Firm” award is widely regarded as NSE’s most-prized award because of its focus on market integrity and service delivery.
At the end-of-year ceremony in Lagos, Nigerian Stock Exchange (NSE) Chief Executive Officer, Mr. Oscar Onyema, explained that Capital Assets emerged atop the list of all capital market operators, including indigenous and foreign firms, in all the four criteria used to select the “Most Compliant Dealing Member Firm”.
He outlined the criteria for the award to include compliance with the minimum operating standards (MOS) of the Exchange, adequate and timely rendition of statutory and regulatory returns, zero complaint by investors and all other stakeholders, high ethical standards and impressive customer service that leave no room for any penalty.
Onyema commended Capital Assets for operating on global best practices, urging the company to continue to show leadership and raise the flag of Nigeria high in the international markets.
The NSE also honoured Stanbic IBTC Stockbrokers for recording the largest volume of activities during the year.
In an industry-wide review, Capital Assets scored 100 per cent in all the areas of the MOS. The NSE had introduced the MOS in April 2014 as part of efforts to develop a stronger, stable and sustainable capital market. The MOS are a set of standards prescribed by the Exchange for dealing members to develop robust controls; strong governance framework and effective human capital that will enable them achieve best-in-class operations in order to compete on a global level for the benefit of investors and the capital market.
According to the Exchange, the main objective of the MOS is to ensure effective operational, technological and governance structures among the dealing members of the Exchange.
The Exchange stated that given the dynamic nature of the capital market, the diverse mix of local and foreign investors could only invest when confident that dealing members operate pursuant to clearly defined standards that are comparable to those to which broker dealers in developed markets operate with in terms of size, skill, technology and organisational governance.
Capital Assets LimitedVice Chairman and Chief Executive Officer, Mr. Ariyo Olushekun, said winning the award within the diverse mix of foreign and indigenous operators has further confirmed the quality of human capital in the company.
He pointed out that the implementation of Capital Assets’ enterprise risk management framework has ensured that its operations are conducted in line with global best practices, which contributed immensely to winning the NSE award.
“Over the years, we have always placed emphasis on professionalism, transparency and accountability in our dealings with our customers, the regulators and all other stakeholders. Our customers know all these and they trust us, because we have repeatedly demonstrated that we operate with the highest ethical standards,” Olushekun, a former president of the Chartered Institute of Stockbrokers (CIS), said.
He enthused that over nearly three decades, no staff member of the company has been found wanting by the relevant regulatory agencies, a culture that they all have sustained at Capital Assets.
The award came on the heels of conferment of the best company in risk management in the banking and investment services industry on Capital Assets at the Nigerian Risk Awards.
The Nigerian Risk Awards, which recognises risk management in emerging markets, was conceived by Conrad Clark Nigeria (CCN) Limited in collaboration with Business Day and the United Kingdom’s Institute of Risk Management. The Chief Risk Officer of Capital Assets Limited, Mr Azeez Adenle also won the Risk Manager of the Year Award at the event.
According to the organisers, the Nigerian Risk Awards recognises and rewards organisations and individuals who have achieved measurable results through the effective implementation of enterprise risk management principles. Particular emphasis is placed on those who have developed creative and innovative solutions in overcoming the challenges facing businesses and organisations in Nigeria.
Capital Assets Limited was incorporated in 1995 and commenced operations in 1998. It is a dealing member of the NSE. It is registered with the Securities & Exchange Commission (SEC) as an issuing house, fund manager and broker-dealer. It is authorised by the Central Bank of Nigeria (CBN) to deal in Treasury Bills.
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Stock Exchange promotes Exchange Traded Funds
The growing issuance and acceptance of Exchange Traded Funds (ETFs) in the capital market will widen the depth and liquidity of the stock market and provide investors with amenable access to diversified portfolio of shares and securities.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, who spoke at a workshop on ETFs organised by the Exchange in Lagos, said ETFs would provide additional benefits to all investors.
There are eight ETFs listed and traded on the NSE-Exchange. they are Newgold ETF, Vetiva Griffin 30 ETF, Stanbic IBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, and Vetiva S&P Nigerian Sovereign Bond ETF. ETFs were introduced at the NSE in December 2011 with cross listing of Newgold ETF with asset under management (AUM) of N287.5 million. The NSE has recorded about 1,900 per cent growth in its ETF market with total AUM of about N4.24 billion as at last September.
“The existence of ETFs in our market is beneficial to retail and institutional investors, as ETFs offer a direct and inexpensive way to attain diversified exposure to an index, commodity, sector, or region. Asides diversification and tradability, ETFs also offer additional benefits of low expense ratio as compared to mutual funds, increased liquidity and can be used to execute different investment strategies,” Onyema said.
He noted that with the ETFs, investors have the ability to quantify and evaluate the trade-offs in the Nigerian stock markets as well as increased ability to select the instrument that allows for the most efficient implementation of their desired strategy.
According to him, while there are about 506 investors holding ETFs, there is optimism that the growth of ETFs in Nigeria has only just started with support of market intermediaries, stakeholders and the regulator.
He reiterated the NSE’s commitment towards developing the Nigerian ETF market by creating awareness of the product, addressing its challenges and promoting its opportunities in Nigeria and Africa.
The history of ETFs dates back to 1990, when the Toronto Index Participation Fund (TIP 35) was launched in Canada. Since then, ETFs have gained widespread acceptance in most developed markets with demand from global retail and institutional investors leading to a variety of offerings by ETF sponsors.
ETFs have become a huge success story, as Global ETF AUM have grown from $1.4 trillion in December 2010 to about 3 trillion dollars as at last April, representing over 102 per cent cumulative growth over the last five years.
Experts have predicted the continued growth of the ETF industry estimating that global AUM will reach at least $7 trillion by 2021.
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Stock Exchange suspends trading on Ikeja Hotel
Authorities at the Nigerian Stock Exchange (NSE) have suspended trading on the shares of Ikeja Hotel PLC in response to the high-stake dispute in the Ibru family. The Ibrus own the majority shareholdings in the hospitality and tourism company.
The Securities and Exchange Commission (SEC) has been notified of the suspension. The suspension will be in place until further notice.
In a suspension notice, the Exchange stated that it has placed full suspension on Ikeja Hotel, implying that no trading will henceforth take place in the shares of the company. Unlike technical suspension where trading can take place without price movement, full suspension disallows both trading and price movement.
The Exchange noted that the full suspension was taken “to safeguard the investments of shareholders of Ikeja Hotel Plc following the continued dispute between the major shareholders which has negatively impacted on the company’s governance structure”.
The NSE stated that it acted pursuant to the provisions of rule 15.45: suspension on trading of securities, rulebook of the Exchange, 2015. The suspension took effect on November 10, 2016.
The Nation had earlier reported that Nigeria’s apex capital market regulator, SEC was scrutinising investigative report on the boardroom crisis at Ikeja Hotel, after the simmering ownership and management crisis within the Ibru family snowballed into a major onslaught by the Economic and Financial Crimes Commission (EFCC).
Reliable capital market sources told The Nation that the capital market regulators had dusted up investigative reports on Ikeja Hotel to review the facts and proactively act to protect shareholders’ interests.
A source at SEC said the apex capital market regulator had received a comprehensive report from the NSE, and the Commission has started reviewing the investigative report in line with the market’s complaint management framework.
Ikeja Hotel, incorporated in 1972 and quoted on the NSE in 2007, controls a chain of hotels directly and through other subsidiaries and affiliates including Tourist Company of Nigeria (TCN) Plc and Capital Hotel Plc. Ikeja Hotel owns Sheraton Hotel, Ikeja, Lagos. TCN owns Federal Palace Hotel while Capital Hotel owns Abuja Sheraton Hotel. The Ibru family owns the single largest individual shareholding.
The EFCC had declared Mr. Goodie Ibru wanted alleging capital market fraud, stealing and money laundering, among others. The family of Mr. Goodie Ibru immediately responded accusing EFCC of bias and mischief, stating that the public notice declaring Goodie Ibru wanted as scandalous, misleading and unfortunate.
In earlier response to the attempt to oust him as chairman, Goodie Ibru had dismissed earlier claims of corporate abuses, noting that those opposed to him had rather ganged up to frustrate attempts to recapitalise the company. Goodie Ibru’s family in the counter-notice to the EFCC notice, reiterated his position that the Ikeja Hotel crisis “centres on family misunderstanding and boardroom politics.”
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Stock Exchange promotes Exchange Traded Funds
The growing issuance and acceptance of Exchange Traded Funds (ETFs) in the capital market will widen the depth and liquidity of the stock market and provide investors with amenable access to diversified portfolio of shares and securities.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, who spoke at a workshop on ETFs organised by the Exchange in Lagos, said ETFs would provide additional benefits to all investors.
There are eight ETFs listed and traded on the NSE-Exchange. they are Newgold ETF, Vetiva Griffin 30 ETF, Stanbic IBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, and Vetiva S&P Nigerian Sovereign Bond ETF. ETFs were introduced at the NSE in December 2011 with cross listing of Newgold ETF with asset under management (AUM) of N287.5 million. The NSE has recorded about 1,900 per cent growth in its ETF market with total AUM of about N4.24 billion as at last September.
“The existence of ETFs in our market is beneficial to retail and institutional investors, as ETFs offer a direct and inexpensive way to attain diversified exposure to an index, commodity, sector, or region. Asides diversification and tradability, ETFs also offer additional benefits of low expense ratio as compared to mutual funds, increased liquidity and can be used to execute different investment strategies,” Onyema said.
He noted that with the ETFs, investors have the ability to quantify and evaluate the trade-offs in the Nigerian stock markets as well as increased ability to select the instrument that allows for the most efficient implementation of their desired strategy.
According to him, while there are about 506 investors holding ETFs, there is optimism that the growth of ETFs in Nigeria has only just started with support of market intermediaries, stakeholders and the regulator.
He reiterated the NSE’s commitment towards developing the Nigerian ETF market by creating awareness of the product, addressing its challenges and promoting its opportunities in Nigeria and Africa.
The history of ETFs dates back to 1990, when the Toronto Index Participation Fund (TIP 35) was launched in Canada. Since then, ETFs have gained widespread acceptance in most developed markets with demand from global retail and institutional investors leading to a variety of offerings by ETF sponsors.
ETFs have become a huge success story, as Global ETF AUM have grown from $1.4 trillion in December 2010 to about 3 trillion as at last April, representing over 102 per cent cumulative growth over the last five years.
Experts have predicted the continued growth of the ETF industry estimating that global AUM will reach at least $7 trillion by 2021.
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Bearish trading at NSE, index drops
It was a mixed grill as bears took over trading at the Nigerian Stock Exchange on Friday, depressing the All Share Index and market capitalisation.
The major positive was in the volume of shares traded. It grew by 34.95 per cent, as investors staked N1.21 billion on 151.85 million shares transacted in 2,902 deals.
The News Agency of Nigeria (NAN) reports that this was in contrast with the volume of 112.52 million shares valued at N2.36 billion traded in 2,684 deals on Thursday.
The All-Share Index shed 62.76 points or 0.23 per cent to close lower at 26,981.60 compared with 27,044.36 recorded on Thursday.
Also, the market capitalisation lost N1 billion to close at N9.288 trillion against N9.289 trillion posted on Thursday.
Sterling Bank emerged the most traded stock, accounting for 33.67 million shares worth N27.62 million.
It was trailed by Zenith Bank with an exchange of 24.21 million shares valued at N359.41 million. FBN Holdings traded 20.23 million shares worth N61.70 million.
UBA sold 18.74 million shares valued at N80.49 million. Access Bank posted a turnover of 9.58 million shares worth N53.71 million.
NAN also reports that major blue chips posted price losses with Seplat leading the losers’ table having lost N19 to close at N361 per share.
Total came second with a loss of N16.62 to close at N315.88, while Guaranty Trust Bank shed 93k to close at N22.57 per share.
Nigerian Breweries was down by 86k to close at N142 and Zenith Bank declined by 30k to close at N14.80 per share.
On the other hand, Nestle led the gainers’ table with a gain of N19.96 to close at N814.94 per share.
Larfarge Africa garnered N5.08 to close at N54.88 and Flour Mill increased by 70k to close at N19.70 per share.
Air Service rose by 20k to close at N2.54, while AfriPrudential Registrar advanced by 12k to close at N2.60 per share. (NAN)
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Bankole canvasses listing of big companies on Stock Exchange
•Stockbrokers chief urges quick economic recovery measures
Former House of Representatives speaker Hon Dimeji Bankole has called for systematic government regulations that ensure big companies operating in Nigeria are listed on the floor of the Nigerian Stock Exchange (NSE).
Bankole, who was guest speaker at the Gala Night for the 20th yearly conference of the Chartered Institute of Stockbrokers (CIS) in Lagos, noted that the capital market cannot serve as a true barometer for the economy because several big companies operating in the countryare not publicly quoted.
According to him, in the same way that the economy is in need of complexity, the stock market is also in need of a broader variety of stock options. Examples of such big companies include major companies in the telecoms sector, such as MTN, Globacom and Airtel; distribution and generating companies (discos and gencos) in the electric power sector; and all major companies in the upstream oil and gas sector.
He pointed out that the absence of these companies from the capital market has constrained the scope and depth of the market and by so doing the market’s capacity to serve as credible investment outlet.
“This needs to be changed; shallowness of the capital market was a major reason for the asset bubble in 2007/2008 that caused the near collapse of the market. The asset bubble arose from over concentration of financial assets in few viable equities, amidst an unprecedented credit boom in the economy,” Bankole said.
He added that to develop a sound capital market with high absorptive capacity as seen across developed economies, government and all stakeholders must work to deepen the Nigerian capital market.
“We need economic complexity; this means that the government and economic regulators need to compel all major enterprises in the economy to list their shares in the capital market. These major companies make a lot of revenue from the labour of Nigerians who are unable to hold stake and share in their wealth,” Bankole said.
He called for continuing enhancement of the regulatory system at the stock market to sustain investor confidence and forestall market abuses.
According to him, in 2008, Nigerians willingly borrowed money from banks to invest in the stock market and when the market bust, innocent Nigerians were left to pick up the pieces and there’s very little that can be said today to convince them to bring their hard-earned wages to capital market that in their eyes failed to protect them as the banks made profits at their expense.
He pointed out that the Nigerian stock market cannot thrive without the backing and support of the Nigerian people, noting that in order to renew the confidence of Nigerians in the stock market, the regulatory agency must ensure its own visibility and transparency within the market.
“It must be seen as a credible authority with legitimacy and power to act. Boosting domestic investor confidence will send signals to the market that will attract foreign investors,” Bankole said.
Meanwhile, the CIS President Mr Oluwaseyi Abe, has urged the Federal Government to ensure speedy implementation of its new measures aimed at reviving the Nigeria’s economy.
Besides, Abe who expressed optimism in the potency of the government’s economic revival strategy, stated that growth should be equitable and inclusive for enhanced overall development of the economy.