By Udeme Ekwere

Tuesday, 4 Jan 2011

Activities in the Nigerian capital market are set to begin on a positive note this year, with the take-off of the Asset Management Corporation of Nigeria, experts have said.

The experts who spoke to our correspondent in separate interviews on Monday, said that with the purchase of the toxic assets of banks by AMCON, more growth would be recorded in the market in 2011.

Investors had gained a total of N2.9tn in 2010, with the market capitalisation of the listed equities rising from N4.99tn in January 2010, to N7.91tn as at December 31, 2010.

The Managing Director, Compass Securities and Investments Limited, Mr. Emeka Madubuike, noted that the buying of the toxic assets had signalled a relief for stakeholders in the market.

He said, ”This is especially true as the activities of AMCON will ensure that operators will be free of encumbrances attached to borrowing from banks and will be able to concentrate more on doing their businesses.

“Banks will not have to sell their shares, thus boosting their activities. I think the whole essence of the AMCON is to get banks to begin to lend again to the real sector and as such, this will benefit the economy and the market.”

Also, the Managing Director, Lambeth Trust and Investment Company Limited, Mr. David Adonri, said that the move by AMCON would enable the economy in general to have access to more funds.

He said, ”With AMCON‘s intervention, volume of credit to the economy will increase, thus boosting corporate earnings. Absorption of shares from non-performing margin accounts will reduce supply in the capital market, thus boosting demand. These two factors will work together towards strengthening the capital market this year.”

”Because of the structure of Nigeria‘s economy which favours short-term trading activities where banks are principal facilitators, their resuscitation by AMCON will materially impact on corporate earnings and boost profitability of the Market.”

He added that the market had already started to respond positively to the issue as was visible from the last trading day of 2010, with significant increase in major market indicators.

Specifically, the market capitalisation rose by 0.03 per cent or N2bn from N7.912tn to close at N7.914tn, while the Nigerian Stock Exchange‘s Index rose by 4.92 points to close at 24,770.52.

Source: Punch