Low patronage of the  Nigerian stock market  by investors has been linked to  phobia most investors are having, following the nationalisation of three banks by the Central Bank of Nigeria (CBN), THISDAY checks have revealed.

The chief executive officer of a leading stockbroking firm, who spoke under the condition of anonymity, confirmed to  THISDAY that despite the attractive prices of many equities and impressive earnings companies are declaring, most investors remained hunted by the August 5, 2011 action of the CBN.

The banking watchdog had in August, nationalised  Afribank Nigeria Plc, Bank PHB Plc and Spring Bank Plc, saying the three banks did not show any sign of meeting the September 30, deadline given to the rescued banks.

At the time of nationalisation, the three banks had a market capitalisation of N29.7 billion. However, the banks, which were to be acquired by the Asset Management Corporation (AMCON) and changed to Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited respectively, where eventually delisted from the Nigerian Stock Exchange (NSE).

And the CBN governor, Mallam Sanusi Lamido Sanusi, declared that following the nationalisation of the banks, their former shareholders had lost their investments in the three banks.

But the CEO of the broking firm said both local and foreign investors were still feeling the negative impact of the action, a development, he explained,  had  inhibited recovery of equities at the stock market.

“Many  investors, both foreign and local are very hesitant in returning to the market now despite the investment opportunities. Prices of many equities are very attractive, companies are churning out improved corporate results. But demand has not been stimulated because investors are still scared, thinking that if they invest now they  may wake up one and see that their companies have been taken over by regulators,” the leading broker said.

A shareholder activist, Mrs. Bisi Bakare, had also told THISDAY in a telephone interview  all her relatives and friends she talked to about  investing in shares were not willing to return to the market for now.

“They are not encouraged to invest in the shares for now because those of them who lost money in the nationalised banks are feeling very sad. There is no level of preaching you will do that will make them return to the market for now.  I believe that positive comments and words of assurance from regulators will, to some extent, assist in bringing back investors to the market,” she said.

In spite of companies flooding the market with improved third quarter results,    the market is far from stability. Major market indicators continued to fluctuate with the year to date loss of the market standing at 17.15 per cent.

Source: ThisDay/Goddy Egene