NSE DG, Oscar Onyema
Hopes of a positive growth in the Nigerian stock market this year are still alive as the market recorded a growth of 6.4 per cent between January and May 2012.
The Nigerian Stock Exchange (NSE) All-Share Index, which is the major gauge for measuring the aggregate growth in the market, rose from 20,730.63 at the beginning of the year to 22,066.40 at the end of May.
On the other hand, the market capitalisation of equities gained N504 billion to rise from N6.533 trillion to N7.037 trillion. Although the index had peaked at 22,665.99 during the month of May, profit taking cut short the positive run.
However, when the growth in five months of 2012 is compared to the performance of the market in the same period of 2011, the growth in the current year is higher.
The index had appreciated by 5.95 per cent between January and May 2011 as against the growth of 6.4 per cent in the same period of the current year. While market capitalisation of equities added N357 billion last year, it has added N504 billion this year.
Market operators said the market needed the support of the Federal Government to achieve total recovery, saying the efforts by the management of the NSE and Securities and Exchange Commission (SEC) alone were not enough to lift the market.
According to them, the issue of liquidity is still a big challenge in the market, a development that has made many stakeholders to call on the government for direct injection of funds into the market.
The Chartered Institute of Stockbrokers (CIS), Association of Corporate Trustees, for instance, had made a case for the intervention of the government through funds injection.
The former Director-General of the NSE, Mrs. Ndi Okereke-Onyiuke, recently made a similar call while appearing before the House of Representatives Ad hoc committee that probed the near collapse of the capital market.
According to Okereke-Onyiuke, no amount of “workshops and discussions” will revive the market without direct and cash injection.
“Only direct physical injection of funds can change the direction of the capital market just as Asset Management Corporation of Nigeria (AMCON) did for the money market. No amount of workshops and discussions will avail. A strong government bail-out as obtained in United States, Britain, Russia, Singapore among others is the magic wand needed,” she said.
She said that the NSE and its stockbrokers worked assiduously in collaboration with the Central Bank of Nigeria to bring AMCON to life, lamenting that the corporation has concentrated its efforts on only banks.
“AMCON was set up by CBN to buy these toxic assets (margin loans) with the hope of divesting when the market picks up. However, the modus operandi of AMCON in this respect seems unconcerned as far as market operators and shareholders are concerned. AMCON seems to concentrate only on banks,” she said
News source – Thisday