In this interview with PETER OBIORA AND Richard ABANGWU of InvestAdvocate, Ariyo Olushekun, President/Chairman, Chartered Institute of Stockbrokers (CIS) in Lagos Nigeria takes on issues regarding the current growth at the Nigerian Capital Market, the new SEC Boards and other matters arising. Excerpts:
The Nigerian Equities Market recoded 19% growth in its first quarter (Q1) which is an improvement compared to last year report. Now what just came to my mind after the strong Q1, what lies ahead for the Nigeria Capital Market?
The strong performance we had in the first quarter is an indication that the Capital Market recovery which took off in the last quarter of last year has fully stabilised. We are fully on the part of recovery now, more investors are realising this and are taking position. If you recall, the opportunity has always been there; because many of the stocks were undervalued. Hitherto, it was largely foreign investors that were seen during that opportunity, taking advantage of it.
Right now more Nigerians are seeing that and are coming in. In fact, the major benefit as far as I’m concerned is in the distribution of participation in the Market. Foreign investors now account for about 39%, which is the way it should go as at the end of February 2013. That’s good news for the Market because the recovery can only be sustained if the bulk of the participants are Nigerians. It will be risky for us to rely heavily on foreign investors; because two things can happen with foreign investors.
One is that the situation can improve in there home countries, so they recover their funds abroad and go back. Or if they sense that things are likely to change, even if the change is temporary here or short term, they are likely to withdraw their funds and go back to either any country or there home country. Therefore, in those two scenarios, they can put our Market in some form of jeopardy. So, where we have always wanted to reach is the situation where we have more Nigerians investing; and even amongst Nigerians the more the merrier.
If local investors are basically a few Institutions and high network individuals that will not be as good as having a broad spectrum of the Nigerians investing. The Capital Market is supposed to mobilise savings for everybody. The man who is in a remote village and has N10, 000 and the man who is here and he has N10 billion. We want to bring the funds from wherever they are, mobilise them and put them in the Market so that it can flow to areas they are needed and that’s how the economy itself can improve.
FACTS CHECK:
“The Nigerian equities Market at the end of the First Quarter (Q1) of 2013 grew by 19 percent (19%) compared to 0.38% recorded in the same period of year 2012.
The NSE’s All-Share Index (ASI), increased by 19% in the review period. It rose from 28,078.81 at the beginning of the year close at 33,536.25 at the last trading day in March 2013â€ÂÂ.
Your reaction on the new Securities and Exchange Commission Board led by Suleyman Ndanusa
I think it’s a strong Board, I think is a Board that should add value. I look at the people they appointed, then and I think they are resourceful people. They are people who have achieved something in their individual careers. They should be able to add some significant value to the Capital Market.
Those in the Executive are actually re-assuring. The Chairman is not in the Executive; but look at his experience, he was the Director General of SEC, and he has played in all aspects of the Market. He has played as an Operator; he has played as the Chief Executive of the Regulator. He has also played in the Market in the position of an Issuer. You know he was the MD of a Bank and all that. He has played in different aspects of the Market. He will understand the whole issues. His going to see things from different perspectives and he knows where the shoe pinches for everybody and will be able to take appropriate action.
The Executive Commissioners are also people who have there past speaking for them. The Executives for operations has been in SEC and the Nigerian Stock Exchange before. I think he is eminently qualified for that position. Executive Commissioner for Legal, she is a former Attorney General; so she is a top lawyer. That confirms that she is eminently qualified for that position and I believe she will add value. Executive commissioner for Finance/Admin is a former Speaker in the Edo house of Assembly. That’s not a small person and it means that he is a proven leader. So, all of them put together should be able to inspire confidence in the minds of the investors as well. I think it’s a strong Board and the quality is commendable.
EDITOR’s NOTE:
On December 22 2012, President Goodluck Jonathan approved the appointment of a new Board of SEC.
The appointment according to the Presidency is in line with the provisions of section 5 of the Investment and Securities Act 2007. Below are the appointees:
1. Dr Suleyman Abdu Ndanusa
Zone: North Central
Position: Chairman
2. Mallam Mounir Haliru Gwarzo
Zone: North West
Position: Executive Commissioner
3. Mrs Sa’adatu Mohammed Bello
Zone: North Central
Position: Executive Commissioner
4. Rt. Hon. Zakawanu Imhobobho Garuba
Zone: South South
Position: Executive Commissioner
5. Barrister Adefunke Abiodun
Zone: South West
Position: Non-Executive Commissioner
6. Mr Ugochukwu Ikemba
Zone: South East
Position: Non-Executive Commissioner
The implication of SEC and zero budget to the Nigerian Capital Market
The implication is obvious. If you don’t have funds, you are incapacitated and that is why my position will be that this matter should be resolved by both sides soonest. I already said it, it is affecting the Market. The earlier we solve it the better.
On the sale of Market Data by the Nigerian Stock Exchange
One the issue of ownership of data, whether people should pay for certain information or data or not is another thing and the issue of timing is another. Let’s even leave the issue of ownership; because you can argue both ways. All the data generated by different Stakeholders in the Market, I don’t want to get to that. The issue that we should treat now is whether we should pay for certain information and that is tied to timing. Where are we now and at what stage is this Market? We have a population of 170 million people; do we have up to 5% of that population participating in the Market?
The answer is ‘no’. I guess we have 5 million people. 5 million people that we have will include duplication of accounts. You are Peter Obiora, may be you are Peter Uchechukwu Obiora. You have an account in Obiora’s name; you have an account in Uchechukwu Obiora’s name. So, that is three (3) accounts formed out of one person.
The three (3) Accounts for one person. That’s triple counting and still part of the 5 million. We have people who have 10 or more accounts. So, what is good for the Market is to get as many people from our population participating in the Market. In addition, we are coming from a situation where there has been a near crash and we are just trying to get people back into the Market. Now, how do you get them back into the Market? It’s by giving out information that will help them to take decision to come back to the Market.
The raw material for operating in this Market is information. All the stakeholders rely on information. So, where you now want to sell some of these information; but they are not available, then, people won’t come. Some informations are too basic for us to want to sell.
If we are going to be selling information, it must be information that we have added value to. You can sell basic information, they are too raw. We did transactions today XY Stock closed at N10.00, That’s common information. Nobody is going to sell the price at which the last transaction of say for instance yam sold at the Market yesterday.
It’s open to everybody. If you need to sell information, then you have to be creative you need to take the information, process it and add some value and then that’s when you can sell or you sell information that are live data; right now as they are trading on the floor, if there is a link and people can see what is happening immediately. If you want to sell that you can have a case; but in the real sense of it you shouldn’t sell information.
The reason you shouldn’t sell for instance, investors are looking at buying a certain stock and they are seeing live data and the way prices are moving. If the stock has gotten to N20.00 and the investors may have bought it for N8.00, they may decide to call their Stockbrokers about the information received from other places and decides to act upon it. It’s not from the Firm they got the information that will benefit; but their Stockbrokers. ABC Securities is benefiting, the Stock Exchange is benefiting from every transaction that is done, SEC makes something, CSCS also benefits.
But the Company where the investors got the information will not benefit from the transaction; the Company may not be their Broker. Transaction which is not live, which shows what has happened at the end of day is just a report. I don’t see why they should be selling that. I think price list, gainer, losers, result of companies, who owns the result? It’s the companies.
They only provided it to the Market, where they believe buyers and sellers come to. These people do business through there agents called the Stockbrokers. When you broker deals in the Market, its representing people, they should be able to give these informations to them.
The way things are now, we are at a level that we should be encouraging more people. America has a population of 300 million, over a 100 million people are playing in the Market. That’s one-third and we are nowhere near that figure. So, America is more than 10 times ahead of us in terms of percentage of people playing in the Market.
So, we still have a long way to go. We need to do things to encourage more people. What we need to do will be done by everybody. Government has done well for the Market by abolishing Value Added Tax (VAT). If Brokers cannot provide information that means they have to sell to people and if the people say they are not buying, what will be the outcome? So, the investors does not have much information and if, a point was made that the exchange will be willing to make it available to the press for free, that doesn’t sound good because they are going to give it to the Press for free, then the press will put it in there newspapers and use it to sell there newspapers so they are willing to give it to someone who will sell it and make money but you are not willing to give it free to someone who will give it out free.
On the CIS Bill Amendment
Well for the Bill, a public hearing was supposed to come but we requested the committee to postpone it. The major reason was to enable us reach out to more people, different stakeholders to discuss issues that anybody will have for or against it. Details on the Bill will be made available shortly.
The CIS building project
The building is on, and we are working on it. We have identified the land and we are in the process of closing the deal.
Status update on Market Infraction under your watch as the President of CIS
Well, we keep working and taking actions on the issues brought before us. We have an investigating panel that has three (3) teams. So, those complaints are dealt with speedily. Even though it will seem not to be busy as thought; which shows that things are improving no more complaints. The level is going down. Just last week the disciplinary tribunal met and delivered judgments in two (2) cases.
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