Maiden Press Briefing To Capital Market Correspomdents By The Nigerian Stock Exchange’s Interim Administrator, Mr. Emmanuel Ikazoboh In Lagos, Tuesday, August 17, 2010; 12:30 Pm To 1:30 Pm

 

Distinguished Gentlemen of the Press:

I am highly delighted to welcome you all to this forum. As you are all aware, I was introduced to the Capital Market Community on August 5, 2010 as an interim Administrator following the exit of the former Director General. In recognition of your pivotal role as specialists that cover capital market activities, I deem it necessary to meet formally with you this afternoon.

 

We are all witnesses to the circumstances that led to the exit of the former Director General. Having read several reports on the issue, I have come to the conclusion that there is a need for us to dialogue on the need to stabilize the market. As specialists in reporting market activities, the quality of your reports will go a long way in building investor confidence and achieving the desired stability and growth. Distinguished Gentlemen of the Press, yours is an immense responsibility. You will agree with me that it ought to be discharged with great care; always ensuring fidelity to accuracy in the best interest of the market.

 

Prompted by enquiries and reports from many of you, last week, I tried to situate reporting the downswing on The Exchange within the context of developments in the international stock market because our market is a global player.  I wish to seize this opportunity to re-affirm that our market fundamentals are strong and the current trend is a phase that would pass away.

 

In my statement last week, I noted that the Dow Jones Industrial Average Index, the JSE All-Share Index, the FTSE 100 Index and the DAX Index in Germany, among others, are also experiencing a downswing as institutional investors concerns on stability of the world economy.

 

The global trend confirms the thinking that the stock market is a barometer for the economy. We need to appreciate this in our analysis of transactions on the market because the quoted companies cannot operate in isolation from the economy. In that regard, I am pleased to note that as against the bearish run that persisted last week, our All-Share Index yesterday rose by 0.8 percent, translating to an increase of N42 billion in the market capitalization on Monday, 16 August 2010. This is a hallmark of a dynamic stock market which cannot remain static.

 

Distinguished partners in progress, one of the lessons that investors through The Exchange need to learn from the global meltdown is the essence of portfolio diversification. Many investors had hitherto concentrated on equity at the gross neglect of other asset classes, especially fixed income securities. Today, awareness is gradually rising regarding investments in bonds as many state governments and corporate entities have applied to raise funds on the market via bonds. It must be noted that investment in bonds guarantees a fixed income. Until the late eighties, the bulk of investment through The Exchange was in debt securities, before equity investments took the centre stage.

 

As part of The Exchange’s commitment towards encouraging more investments in government bonds, in January, 2010, the Council reduced transactional charges for this sub-sector, i.e.,   Federal Government Bonds, State Government Bonds, Local  Government Bonds ( Municipal) as well as Corporate Bonds.

 

We expect more companies to take advantage of this gesture by considering the bond option in their capital raising planning. Investors should also take advantage of the fee reductions to include fixed income securities in their portfolios. It is heartwarming to say that The Exchange’s Trading Platform is effectively configured for trading bonds. Listing bonds on the market would not only increase its depth but enhance the rating by the International Agencies who prefer quoted securities in rating stock exchange.

 

Furthermore, we are forging ahead with the process of purchasing a new trading platform. Considerable research and market analysis has gone into the platform selection effort to ensure that we secure a platform that employs up-to-date technology and has the capacity that we require in this market now and in the future. The platform we will purchase will be comparable in all materials aspects to those used in other exchanges such as the New York Exchange and the London Stock Exchange.

 

Distinguished Gentlemen of the Press, we have a common goal: building investor confidence through regular and professional provision of accurate information and professional dissemination of such information, given the sensitive nature of the capital markets.

 

Once again, I thank you for honouring our invitation and I look forward to further interaction during the Question and Answer Session.

 

God bless you all.

 

Mr. Emmanuel Ikazoboh

‘Interim Administrator’

The Nigerian Stock Exchange

Tuesday, August 17, 2010