Tag: stock

  • Jonathan and  2012: Nigerians take stock

    Jonathan and 2012: Nigerians take stock

    In a matter of days, this turbulent year will go to bed. Nigerians, in this piece by MUSA ODOSHIMOKHE, express their views about the dying year and their assessment of the President Goodluck Jonathan-led administration.

    Depending on which side of the divide they belong, Nigerians are already passing judgements on the performance of Jonathan Administration in this outgoing year. Also, stakeholders are beaming a searchlight on the performance of the ruling Peoples Democratic Party (PDP).

    People’s perception about the administration in the year began when they woke up on January 1 to the stupefying reality of an increase in the pump prices of petroleum products.

    Of course, the authorities might have expected some rebuffs. But little did they envisage the massive reactions it attracted, which held the country down for days. From south to east, north to west, Nigerians, in utter exasperation, trooped out to have government reverse the “anti-masses” decision, which catapulted the fuel pump price of from N65 to N140.

    After gruelling days of sleeping in the streets over the matter, the people won for themselves what many termed as Pyrrhic victory. Unfolding developments that followed that decision opened another can of worms: an enquiry into the oil and gas sector which revealed corrupt deals of unimaginable magnitude.

    The probe led to the beaming of the searchlight to other government departments. This has largely informed the opinions in many quarters that the administration has not lived to its electoral promises in terms of judicious use of tax payers’ money.

    Another parameter for Nigerians’ assessment of the administration in the year is the worrisome state of security. The chairman of Conference of Nigerian Political Parties (CNPP), Alhaji Balarabe Musa, is among the deeply worried Nigerians over the insecurity that has for months now, remained on the high side.

    While assessing the out-going year vis-à-vis the general performance of the administration, he described Jonathan’s performance as marginal. “This administration has only given a marginal account of itself; all the problems he listed to be tackled during electioneering campaigns are still very much there. There is now the prevalence of hunger in the land; the security situation has not improved and there is high-scale corruption among government agencies,” he said.

    To the former Kaduna State governor, although the probes in some ailing sector have unveiled the dirty deals going on in many departments, those probes are not different from those put in place by previous administrations. Reason: There has not been any decisive punishment for those indicted.

    Balarabe may not be wrong after all. For instance, in the enquiry into the oil and gas sector, billions of naira were discovered to have gone down the drain as petroleum marketers claim subsidies for the products they never supplied. Unfortunately, some key members of the House of Representatives, whose mandate was to scrutinise the involvement of those mentioned by the probe, were equally caught in the web.

    To former President of the Committee for the Defence of Human Rights (CDHR), Mr Olasupo Ojo, the probe is nothing but a wild goose chase. He contended that whatever government was doing in the name of fighting corruption would not lead anywhere because it was not being done genuinely.

    Also, to Ojo, government has been insensitive to people’s plight as it had not cared whether the people had something to eat or not. He noted that a government which earmarked over a billion naira for breakfast and lunch in its budget could not be bothered whether the people went to bed on empty stomach or not. He said those in power are obsessed with gluttony while people bear the brunt of taxation.

    Ojo lamented that government could no longer think about people’s welfare because the seat of power had become an avenue for merry making, thus leaving helpless Nigerians to bear the consequences of their inactions.

    He said: “Government has failed in all departments and its programmes and policies don’t have human face. It has let the people down when it matters most with harsh economic implication forced down people’s throats.”

    Equally disturbed by the awry turn of events in the country is former Secretary General, National Union of Petroleum Employees and Natural Gas (NUPENG), Chief Frank Kokori. He reflected on the orgy of corruption perpetuated by those entrusted with the leadership in the country, submitting that “the whole situation is amusing.”

    He contended that the present administration has no capacity to fight corruption because it was not well-positioned to do so. He stressed that the probes set up to look into the activities of corrupt government officials and departments were mere shadow chasing because nothing concrete would come out of it.

    His words: “There is this rumour making the rounds that Jonathan is very corrupt; therefore, corruption cannot tackle corruption. If you are corrupt, you will be afraid to tackle corruption. The late General Murtala Mohammed was able to tackle corruption within the six months of his leadership because he was not corrupt.

    “General Yakubu Gowon was not corrupt, but did not fight corruption because those around him were corrupt. Alhaji Shehu Shagari was not corrupt, but those around him were. General Muhammadu Buhari was not corrupt. General Ibrahim Babangida was very corrupt and paid deaf ears to the fight against corruption. The late General Sani Abacha went nuclear with corruption as his family was involved in high-scale looting.”

    The former labour activist noted that the heart-rending looting of public fund drew the ire of international community as Nigeria was seen as the dumpsite of corruption during the military era.

    To him, despite the confidence that Nigerians reposed in ex-President Olusegun Obasanjo, the Ota farmer could not tackle corruption headlong.

    He further lamented: “Government stealing from the national coffers has left the people suffering; it has heightened the rate of crime because of youth restiveness due to lack of jobs, and this has exacerbated the security situation in the country. This administration has shown that it lacks the capacity to confront these challenges; this has further cast a dent on the government’s image.”

    However, some analysts believe that the Jonathan Administration is on course. They opined that his administration inherited, and has almost been overwhelmed by crippling forces.

    For instance, the government’s probe and trial of those who swindled the N32 billion Pension Fund; the smooth conduct of Edo and Ondo governorship elections this year, and getting NNPC and PPPRA to return over one trillion naira into government purse are being cited as a pointer government’s genuine effort to give credible leadership.

    Chief Femi Alafe-Aluko, a governorship aspirant in Osun State in 2011 under the PDP gave an insight into the administration efforts. “President Jonathan has succeeded in keeping Nigeria one, despite all odds. Jonathan means well for the country, but honestly, he really has to do more,” he said.

    Many are quick to point at the governorship elections that were held in Edo and Ondo states as one of Jonathan’s cardinal achievements. But some believe that it was because the people were really out to defend their votes against any machination that gave room for electoral normalcy in both states.

    Balarabe, for instance, said it was a balance of terror that really played out. “In the areas where PDP was defeated, it was not because the election was given a free hand by government; it was because there was balance of terror.”

    The Jonathan Administration has always beaten its chest that every vote in Nigeria will count at any election. This forms the basis of ongoing reforms in the nation’s electoral process.

    Kokori, while commending the President on the electoral success recorded so far, remarked that the ‘one man, one vote’ regime should be extended to the entire Southsouth, where he believes the ruling party had not completely allowed the people to make their choice.

    He said: “The ‘one man one vote’ is eventually catching up and I commend Jonathan for this, but he should allow it to be extended to the other Southsouth areas where election has not been free. The people of Delta, Rivers and Bayelsa states need to have free and fair elections.”

    Analysts also believe the highest number of avoidable deaths among defenceless Nigerians has been recorded under this administration this year than any previous government. The refusal of Boko Haram sect, which often claimed responsibility for the killings, and the group’s readiness to open possible negotiation with government, portray the administration in bad light Many said it lacked the tact to instil peace in the polity.

    The people are now used to hearing of bomb blasts and nobody seems to feel concerned each time the news of bombing is announced in any part of the country. And government is fond of promising to deal with the perpetrators. A federal legislator, Bamidele Faparusi, who represents Emure/Gbonyin/Ekiti East Constituency in the House of Representatives put it succinctly: “The administration lacks direction on all fronts. Majority of the people are not feeling the impact of governance; rather, they are getting death through bombs from Boko Haram as gifts.

    “There is no index to show that there is genuine effort to reduce the problems facing Nigerians because there is evidence of complacency on the part of those who rule; this is rather sad for the country. The government must show its genuine commitment to rebuilding Nigeria in the coming year. Nigeria, to say the least, is in dire need of sanity.”

    The late foremost educationist, Dr. Tai Solarin, if alive now, would weep his heart out in view of the festering rot in the system, so one of his loyal apostles told The Nation on Monday. He is the national coordinator of National Problems and Solution (NPS), a non-governmental pressure group, Dr. Wale Omole.

    Omole, also the Chief Executive of T&S Hospital, Lagos, said: “Nigeria is deep in trouble. The present administration is practically confused; it is at a loss for what to do to salvage the situation. Look at the condition of our youths; look at the state of things in all sectors of the nation’s life; all these things call for emergency attention by any serious government. Government must wake up and act. Nigerians are on the precipice. It is time government put in vantage positions, those who have the genuine interest of Nigeria and its people at heart. It is long overdue.”

    To worsen matters, natural disasters have increased the emergency challenges confronting the government. The surging of the oceanic and river beds put additional burden on government. Most farmlands were swept away and homes submerged, rendering thousands homeless across the country.

    Now, another new year beckons. Are the country and its constituents going to inherit the woes of 2012? This is the poser begging for urgent answer. The President has beaten his chest that he would do better in the coming year. Now, the nation waits to know if it is yet another case of empty promise.

     

     

     

  • Market makers net over N500b for stock market

    The Nigerian Stock Exchange (NSE) has gained over N500billion in less than two months of the operations of the 10 primary market makers appointed to inject liquidity into the system, The Nation has learnt.

    NSE had appointed market makers to buoy activities in the market by injecting liquidity into the system. Subsequently, it introduced market making stocks into the Bourse to galvanise the position of the market.

    The Managing Director, BGL Securities Limited, Mr Sunday Adebola said the figure is expected to increase as the market gathered momentum. He said the market capitalisation has been increased three times since September 2012 when the management of the Exchange gave the market makers the approval to operate.

    Giving a breakdown of activities in the market, Adebola said the market capitalisation was N8.06trillion a day before September 18, when the market making activities started on the floor of the Exchange.

    He said the market capitalisation rose from N8.06trillion to N8.103trilion within 24 hours, a development that suggests that the market has been rejuvenated by the activities of market makers.

    He said: “ As at October 19, 2012, market capitalisation has grown to N8.69trillion, indicating 7.84 per cent growth. Currently, the market stands at N8. 590trillion. In the same vein, the All-Share Index rose from 25.337.18 basis points on 14-09-2012 to 27.296.35 basis points on 19-10-2012. This shows a gain of 7.73 per cent. The All-Share Index stands at 26.982.55 per cent. We can comfortably say that the market has gain over N500billion since the introduction of market makers till date.”

    According to him, the market will gain sufficiently if the trend continues in the market which has shown a considerable level of growth within a short period of time. He said the market has virtually gone to sleep, following the crisis that rocked the financial system in 2008.

    Also, the Chairman, Anchoria Investments and Securities Limited, Dr

    Olusola Dada said the potential of the market has been galvanised since the introduction of the market making system. He said the gradual recovery of the market was occasioned by the various initiatives introduced by the regulators.

    He said the banking sub-sector has experienced a renewed vigour, following the reforms initiated by the Central Bank of Nigeria (CBN)

    “Now that banks have got over their toxic assets and further recovered bad debts hanging on their neck, we should expect an improved performance that would translates into good profitability, growth in shares value and better returns for investors”, he said.

  • ‘Bad eggs cause  distortions in  stock market‘

    ‘Bad eggs cause distortions in stock market‘

    The market is gaining back its lost ground as all indices indicate. The Managing Director, BGL Securities Limited, Mr Sunday Adebola, attributed the development to the introduction of the market making system. He speaks on infractions and the listing of cash-cows, such as telecoms and oil and gas firms to further deepen the market. AKINOLA AJIBADE met him.

     

    What is the focus of BGL Securities Limited?

    The company is a dealing member of the Nigerian Stock Exchange (NSE), operating in the secondary market. By this, we are licensed to buy and sell shares on behalf of our clients, as well as taking trading positions in the market.

    Besides, we are also registered by Securities and Exchange Commission (SEC) as an issuing house, which has put us in a position to raise capital for many companies. For instance, during the banking consolidation, we raised capital for many banks and, over the years brought many companies for listing on the Nigerian Stock Exchange.

    We are also the distribution arm of BGL Group responsible for marketing of financial products being packaged by BGL Group. I would like to say at this juncture that the holding company is BGL Plc. The holding company has three subsidiaries, namely BGL Securities Limited, BGL Assets Management Company Limited and BGL Private Equity Limited. However, BGL Securities Limited is the only dealing member of the NSE.

    What is your volume of transaction?

    We have traded over a trillion naira worth of shares, and the total volume is in excess of N200 billion.

    What is the level of confidence in the market, is it reassuring?

    Confidence is gradually returning to the market due to the efforts of the NSE and the SEC. The two bodies have put in place measures to bring confidence back to the market. If you look at some of the measures, you will realise that they are meant to bring the much-needed growth to the market.

    Recently, NSE introduced market making system programme to foster growth. What this implies is that there are market makers appointed by the NSE, who hold themselves out as being ready  to buy or sell the shares of companies under the market making arrangement  for their respective accounts on regular and continuous basis,  and sell them when there are demands for them. This has brought the much –needed liquidity into the  market.

    Another step taken to return confidence to the market is the entrenchment of best practices derived from the enthronement of corporate governance. Where there is corporate governance, people would do what they are supposed to do. When this happens, shareholders’ value would improve.

    The introduction of Exchange Traded Funds (ETFs)  is another initiative by the Stock Exchange that is highly commendable. More ETFs are still being expected to be introduced to the market in the very near future.  In the past, some companies were not rendering quarterly and annual returns as at when due. The Exchange has taken corrective measures and sanctioned most of these companies.

    Some of them were put on full suspension, while others were delisted for not complying with the listing rules of the exchange. Also, the introduction of securities lending has helped in making the market more liquid. It is instructive to note that without Securities lending, the market makers cannot achieve the desired  objectives.

    How has the introduction of market makers impacted on the system?

    We commenced market making programme in September, and we have seen the positive reaction of the market to this noble initiative. Some stocks have grown by 40 per cent in terms of price movement in the past few weeks. Some have grown by 56 per cent. This is what is making confidence to come back to the market. SEC has been having meetings with stakeholders on how to make sure that the market moves forward. This, among others, is one of the measures put in place to re-invigorate the market. If this continues, we believe within a short period of time, the market will bounce back in a sustainable manner and the investors would be better for it.

    What is the motivating factor for investors now?

    Every investor has his own objective of participating in the market. I can say that investors have made a fortune from the market in the past and even this year.  This year alone; the market has gained about 32. 60 per cent compared to about the 18.5 per cent it lost last year. This has made the market worth looking at by those people that have left the market. We are happy that investors are gradually coming back to the market.

    In recent times, the volume traded has improved. Before, we were trading between N150billion and N200billion worth of shares, but now, we are trading on the average N2.8trillion naira worth of shares. Also, if you look at market indicators, you will observe that the All-Share Index has actually moved up. It is over 27,200 points now. The market capitalisation is over N8.328 trillion compared to about N6.5trillion in the beginning of this year.

    By how much has the market grown in the past one year?

    To be precise, the NSE All-Share Index year-to-date (YTD) is about 31.63 per cent, which is remarkable enough, compared to the 18.3 per cent recorded last year.  On Sectoral Indices year-to-date movement, NSE 30 Index recorded growth of 40.14 per cent YTD, NSE Banking Index also recorded increase of 61.91 per cent, NSE Consumer Index  grew by 301.27 per cent, while NSE Insurance Index  fell by 1.8 per cent. NSE Oil/Gas Index also moved southward by 26.02 per cent. These indicators on the average, showed remarkable growth of the market.

    A lot of infractions were made and attributed to the stockbrokers. What measures have been put in place to prevent a recurrence?

    Before the meltdown, people alleged stockbrokers of many infractions, saying, they are the ones causing distortions in the market. In my opinion, these allegations are not right. For Instance, when you mandated a stockbroker to buy some stocks for you, he would do so in line with the instructions given to him. He would also sell in line with the mandate given to him. We have seen instances  where people  would give stockbrokers mandate to sell their stocks. When they realise that prices of those stocks are going up, they deny ever giving such a mandate, claiming that their mandates were forged.

    That is not to say that we do don’t have few bad persons among stockbrokers. But it cannot be generalised that stockbrokers are the ones causing distortions in the market, I do not agree.  There are principles guiding the market and the market is a structured one that has rules and principles driving it. These are followed by Authorised Dealing Clerks and the Dealing members. Erring operators are properly sanctioned on fair and equity basis.

    Are you saying brokers and investors connive to cause infractions in the market?

    Far from it. There are various infractions in the market. My own understanding of infraction is when you violate the rules and regulations guiding the operations of the market. In the past, we have where people committed series of professional misconduct. They were duly punished and sanctioned appropriately.

    Regulators neither condone market indiscipline nor professional misconduct. That is why our market is still one of the best in the world. Some of the erring operators were suspended, while others have their licences revoked. These are some of the disciplinary actions the regulators have taken to protect the integrity of the market.

    Do you see the surge being sustained or just a flash in the pan?

    It is an undeniable fact that  stock market is  a the barometer of the economy. Events in the economy have reflections on the stock market. Once the economy improves, the market witnesses a lot of activities. If the economy is improving, companies performance will improve and precipitate the release of good results to the market. Once companies’ performances are improving, it will impact positively on shareholders’ value which have direct influence on their prices and lead to market indicators moving upward.

    Besides, it is our prayer that the economy will continue to do well as other macroeconomic factors become more favourable to the market.

    First, it has been observed that there is direct correlation between the price of crude oil and out stock market returns. If the price of our crude oil continue to go up, we are going to see many foreign investors showing interest in the Nigerian market.  Secondly, availability of funding within the economy has also been impacting on the growth of the market. Once there is liquidity squeeze, market becomes sluggish. Thirdly, the decision of the monetary authorities to bring down the interest rate would help improve activities in the market.

    Nigeria’s oil price has been on the increase in recent times. To what extent has it attracted foreign investors to the country?

    According to a data released by the NSE, over 60 per cent of the activities on the buy-side in the nation’s stock market are being controlled by foreign investors. The reason is because the returns in our market are relatively higher than what it is obtained in other emerging markets.

    This has attracted so many foreign investors into the country. Once the oil prices are going up, foreign investors consider the Nigerian market of the positive correlation between crude oil prices and stock market returns. The more we have the oil prices going up, the more our economy becomes buoyant and our market becomes attractive to foreign investors.

    Who are those controlling activities in the stock market-Institutional investors or foreign portfolio investors?

    When we are talking about foreign investments, they are of two types. We have foreign portfolio investment and direct foreign  investment.

    The former refers to a situation whereby foreign investors come to invest in financial instruments in our domestic market, while the latter explains  foreign  investors coming to invest in physical assets  in  manufacturing, power and fast moving consumer goods, among other areas. Here, we are talking about foreign portfolio investors. We have seen some of them coming to buy shares in our market.

    Can you put a figure to year-to-date value of foreign  portfolio investments in the market?

    In foreign portfolio investment, the market has recorded some growth. If the market capitalisation has moved from N6.5 trillion to over N8.6trilion this year. We can safely say that over 60 per cent of this comes from the foreign portfolio investors. It has been estimated that fresh funds of about N419.93billion has been invested this year alone. I want to assume that 66 per cent of this is done by the foreign portfolio investors which  translates to N277.15billion.

    To what extent can we say the infighting between the leadership of SEC and its staff has affected the market?

    This is an internal  issue in SEC, and it cannot affect the market in any way. I believe the issue cannot have any meaningful effect on the market and the issue would soon be resolved soon.

    What is your assessment of the performance of the leadership of the Exchange?

    We can give him a pass mark, considering the good initiatives he has brought into the market. He has brought dynamism that has transformed the landscape of the market. He has initiated certain reforms, and they are yielding fruits. Before now, for the price of a stock to move,  we need to  trade some  stocks up to 50,000 units. This principle has not favoured some high priced stocks thus making their prices to be creeping for sometimes.  But now, with 10,000 units in a single trade, price of such stocks can move. The introduction of market makers is another noble achievement in the market. Others are the introduction of Exchange Traded Fund and the Investors Clinic to educate investors.

    However, the management of Stock Exchange can do better by intensifying efforts in collaborating with other stakeholders to bring more companies to the market. I am talking about giant telecommunications companies, power firms, Energy and oil.  This will go a long way to build capacity and deepen the market. Interestingly, the market currently has 235 dealing members but less than 200 quoted companies. There is the need for more companies to come to the market for listings, as well as introducing more securities so as to increase the market depth and width.

    What are the prospects for fixed-income securities like bonds?

    Some years ago, the Federal Government bonds, called Federal Government  Development stocks, were being traded on the Stock Exchange. At a point, the trading on these bonds stopped and became inactive. Then,  the Federal Government used to appoint stockbroker brokers to buy and sell on behalf of  other stockbrokers. With the establishment of Debt Management Office (DMO), government revisited the bond market by appointing primary market dealers Market makers (PDs/MMs) to trade in bonds.

    However, there is an on-going process  to deepen the bond market. NSE, SEC and DMO are working together to ensure that the retail aspect of bond is returned to the platform of the NSE. Permit me to say that any market that does not have solid retail platform cannot stand the test of time. This initiative of  bringing the retail aspect of bond trading to the exchange is a laudable one. The development would make more Nigerians to participate in bond market. It is only banks and discount houses that are trading in the Federal Government bond market because of their appointment as market dealers makers. They are dealing on wholesale basis. This excludes participation of retail investors in the secondary market.  By returning bond trading to the NSE platform, retail investors would be able to participate in the bond market.

    In what other ways can the government make the bond market stronger?

    For our any country to have a vibrant capital market, you  must have a good payment system, viable REPO market, as well as opening up your market to foreign investors. The inclusion of Nigeria’s bond in JP Morgan Bond Index is one way of opening the financial services market to foreign investors. Through this, foreign investors would have access to relevant data on the instruments and  our capital market would be better for it. Besides, interest rate management by monetary authorities should also be done to ensure that the interest of the market is considered. Furthermore, enlightenment programme by various regulators and market operators should be intensified so as to increase the number of participants in the bond market.