By Udeme Ekwere

Wednesday, 16 Feb 2011

Regulators have been urged to make pronouncements that will ensure stability in the Nigerian capital market.

According to market operators, who spoke with our correspondent in Lagos on Tuesday, activities and the tempo of the Nigerian capital market are much influenced by actions and pronouncements of regulators.

The operators’ position came on the heels of the significant decline recorded in market activities in the past three weeks, which was traced partly to the activities of regulators.

The Managing Director, Ideal Investment and Securities Limited, Mr. George Okafor, said in an interview with our correspondent, that a lot of issues that the regulators had brought up within the last one month could have accounted for the downturn recorded in the market.

He said that issues concerning recapitalisation and capital requirements for stockbrokers, though well-meaning, might affect the market, if not handled well.

He said, “All these issues have to be handled systematically to avoid panic among investors in the market. It is important to note that the market is information-driven, and any little information could trigger reactions among investors.

“This is visible from the fact that in just three weeks the market lost N384bn, which it had struggled to gain over some months. So, we have to be careful of the information we are releasing into the market and how such information is released so that it does not cause panic in the market.”

On his part, the Managing Director, Compass Investments and Securities Limited, Mr. Emeka Madubuike, said that market operators and stockbrokers should be duly carried along in any decision to be made concerning the Exchange.

This, according to him, is because stockbrokers are saddled with the responsibility of explaining to their clients not to withdraw their portfolios at any given time.

Speaking on the recent statements by the Director-General of the Securities and Exchange Commission on the planned merger of brokers, Madubuike said that brokers should have been duly informed of SEC’s plan before the commission went to press.

Following its recovery by 18.9 per cent last year, activities on the Nigerian Stock Exchange continued to rise, hitting a peak of N8.885tn on January 25, 2011. It, however, began a steady decline after that, falling by 4.3 per cent or N384bn to close on Monday at N8.501tn.

The NSE’s All-Share Index fell by 4.3 per cent or 1,198.98 basis points from 27,797.39 to 27,598.41 in the period under consideration.

The NSE-30 Index, which measures the performance of the top 30 stocks, recorded a decline by 60.82 basis points or five per cent to 1,160.28 points, down from 1,221.10 recorded on January 25.

The National President, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, noted that investors were worried by the instability recorded in the market, adding that it was important that regulators, including the Central Bank of Nigeria and the SEC, should put measures in place to bring about market stability.

Source: Punch