New measures aimed at revi ving the Nigerian Capital market, from the present downturn to its former vibrant self, will soon be unfolded, as the Director General of the Nigerian Stock Exchange (NSE), Ndi Okereke-Onyiuke, meet top government officials on Thursday.
“Very soon we shall present to the government and the exchange Governing council two key measures that will turn around the present fortune of the market for better,” the NSE boss told journalists at a brief interactive session.
Pressed to give an insight into when the proposed measures will be presented to government and how soon it will be operational, Okereke-Onyuike declined to give details, but said said more information would be released to the public after approval from the relevant authorities.
However, sources close to the exchange said the measures would be presented to the government this Thursday in Abuja, the Nigerian capital city.
She said “if the measures are approved it will energize the market, attract more local and foreign investors back into the market.”
The NSE has lost several trillions of naira since last March when the glocal economic crisis reached a crescendo.
Several analysts have blamed the situation on the current economic meltdown, occasioned by the massive withdrawal of funds by foreign investors in Europe and America who are hard hit by the meltdown in their countries.
Apart from the substantial drop in market capitalization from about 13 trillion naira and All Shares index from about 30,000 points, prices of shares across the various sub sectors had also fallen substantially.
She said 40% of the money lost was in private placements and not from the public offer.
Over 100 private placements have been done but have not been listed on the exchange.
The NSE boss blamed the discredited private placements for the current problem in the capital market.
Meanwhile, the NSE has reacted to a report of the national committee on review of capital market structure and processes.
The report made 32 recommendations, including market products and offerings, increase length of trading, reduced secondary market trading costs, leverage technology to streamline and improve efficiency of the market as well as disclosure, transparency and accountability.
Other aspects of the recommendations are a strong regulatory oversight, strengthening of Securities and Exchange Commission (SEC) through internal re-organisation, adequate funding for the SEC, demutualization of NSE, review and simplify takeovers, mergers and acquisition processes, among others.
The report had recommended that the planned demutualization of NSE must be supervised by SEC to ensure equality and openness.
But the NSE disagrees, maintaining that the proposed demutualization should be seen as “strictly NSE business and should be left at that”.
”Members of the committee do not realise that the NSE is not a company limited by shares, rendering superfluous the phrases “rights of existing shareholders’’ and in the process concoct avoidable problems”, NSE said in reaction to the committee’s recommendations made available to PANA here.
On the need to increase its trading hours on the floor to six hours from the current three and half hours, to increase daily trading volumes and value thereby improving market liquidity, the NSE described such recommendation as fallacious.
It said the increase in trading hours would not translate to increased turn over and market liquidity.
NSE said the decision to increase the hours should be market driven and in consultations with operators, pointing out that even though the Jourhanesbourg Stock Exchange (JSE), Casablanca, Nairobi, Mauritius and Namibia exchanges trade longer hours than the NSE, they were all led by the NSE in volume traded in 2007.
The exchange also noted that the rules and guidelines for the introduction of market makers had been published and made public as requested by the report.
It attributed its none commencement to liquidity constraints to the non-provision of a liquidity provider by prospective market makers.
NSE said it was working on alternative communications link for the market which include a cutover to broadband and the introduction of internet trading.
This is to further facilitate access to the market, it added.