Minister Harps on Longterm Investment at Nigerian Stock Mark

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Minister Harps on Longterm Investment at Nigerian Stock Market

17th Nov.'08

Against the background of the recent downturn in the fortunes of the Nigerian Stock Exchange (NSE), Minister of State for Finance, Mr. Remi Babalola, has told investors to see their investments in the Nigerian capital market as a long term one, rather than as a 'speculative jackpot'. "I want to reassure investors that our capital market is healthy and sound.

The downturn in the market is a blessing in disguise and also a lesson on the reality of the operations of the capital market,'' the Minister said while declaring opening a two-day workshop organised here by Capital Market Correspondents Association of Nigeria (CAMCAN). ''It is important to view the market as a form of long term investment, rather than a speculative jackpot," Babalola said.

The hitherto impressive indices at the Nigerian capital market took a turn for the worse in March 2008, even though there are indications that the worst may be over, as market capitalization, All Share-Index , share prices and other indicators seems to regain their vibrancy. "My investment advise is for Nigerians and other investors to invest more on a long term and the best time to do so is now, when we have the lowest stock prices we have seen in a long time. The future is bright and promising.

Indeed, there are indications that the market has started picking up, and the trend will continue,'' said the Minister, who was represented by his special assistant, Dr. Felix Ogbera. He said the theme of the workshop - "Stakeholders' Intervention in the Capital Market: Challenges and Prospects" - was timely in view of the current global economic turmoil.

Babalola noted that journalists had a central role to play in attracting foreign investors into the country. "As capital market correspondents, you have a unique role to play in boosting investors confidence in the national economy, especially in this challenging period, given global developments in the capital market. The information you disseminate through your various media houses, to a large extent, influences the decisions of the investing public," the Minister added.

CANCAM President Gbenga Agbana said the workshop was put together to improve the skills and capacity of members, as a way of contributing to the overall development of the capital market and the economy. In a paper on "Government and Corporate Bonds", the Director, Market Development, Debt Management Office of the Presidency, Patience Oniha, said several initiatives had been taken to resuscitate the domestic bond markets, adding that a 20-year bond worth 10 billion naira would be introduce on 26 November 2008.

"The Debt Management Office (DMO) has introduced Primary Dealer Market Maker (PDMM) System to ensure good subscription at the Auctions and to ensure an active secondary market for FGN (Federal Government of Nigeria) bonds. It has also embarked on regular market sensitization programmes, workshops, seminar and press publications among others," Oniha said.

Also speaking in another paper, one of the resource persons, Frank Daria, emphasised the importance and benefits of 'dematerialization' of share certificates in the capital market. "Dematerialization of certificates is a safe and convenient ways of holding securities. It reduces risks of theft, loss, mutilation, forgery and cloning of another persons certificate. It equally ensures easy settlements and reduces delay in registration of certificates," Daria told participants at the workshop.

The NSE, in its bid to discard the use of physical certificates, has fixed December 2008 as the deadline to transit into electronic form of share certificates. Diara said apart from the investors deriving benefits from dematerialization companies, registrar and stockbrokers also stand to gain from the efficiency that goes with the electronic system. He however warned that the proposed system was prone to abuse by operators, adding that insecurities would become uncontrollable and that unauthorised sales of shares by stockbrokers would also be common.