Capital market troubled by low liquidity – Administrator

By Everest Amaefule, Abuja

Friday, 22 Oct 2010

Low liquidity is the biggest problem plaguing the Nigerian capital market, the Interim Administrator of The Nigerian Stock Exchange, Mr. Emmanuel Ikhazoboh, has said.

He said this in a remark at the 14th Annual Conference of the Chartered Institute of Stockbrokers which opened in Abuja on Thursday.

Ikhazoboh said most investors were keeping their stocks, thereby denying the market of the necessary liquidity.

According to him, the interim management of NSE is taking the necessary steps to restore confidence and credibility to the market, so that it can recover from the different shocks it has suffered in recent times.

The NSE boss therefore asked all stakeholders in the market to collaborate in addressing the liquidity problem, as well as other challenges currently facing the stock exchange.

Speaking on the ocassion Chief Executive Officer of Stanbic IBTC Stockbrokers, Mr. Akeem Oyewole, described new listings as key to solving the liquidity problem in the market.

He lauded the current effort being made by the Dangote Group to list Dangote Cement Plc in the market, adding that with the large capitalisation of the company, the market could boast of enhanced liquidity with the listing coming up on Tuesday.

Oyewole said, “New issues are key. In this regard, we are going to have the largest listing in the Nigerian capital market history next week. That is when Dangote Cement Plc will be listed. This is the biggest listing in Nigeria with a capitalisation of up to 25 per cent of the market. Now that is one way of increasing liquidity.

“They have the largest cement factory in sub-Saharan Africa. It is good the Dangote Group is bringing this company to the capital market so that investors can be part of it. The company recently released its half-year results.

“But apart from that, the other area that we think will enhance liquidity is to increase the number of products that can be traded in the market. In this respect, we are working with the NSE to ensure the trading of rights, derivatives, exchange traded funds and futures.

“These instruments are a bit sophisticated, but with the appropriate enlightenment, investors will be able to realise their value. These are instruments that are not common right now in Nigeria, but with proper investor education, we will introduce them into the market.”

In a keynote address, a former president of the association, Mr. Gameliel Onosode, called on all the regulatory authorities in the financial services sector to collaborate and address the problems of the market.

He said, “Regulatory organisations should organise a forum where they meet sufficiently regularly to review issues of interest to national development and promote inter-regulatory cooperation and synergy.

“The Financial Services Regulation Coordination Committee was set up during the introduction of universal banking.

“The Committee, which includes The Central Bank of Nigeria, the Nigerian Deposit Insurance cooperation, the National Insurance Commission, the Securities and Exchange Commission, the Nigerian Stock Exchange and the National Pension Commission, regrettably failed to meet regularly to discharge creditably its advisory function.”

Source: Punch

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