Financial experts on Thursday stressed the need for quick implementation of the 2018 budget and listing of new companies on the Nigerian Stock Exchange (NSE) to tackle the exodus of foreign investors.
They said in Lagos that quick budget implementation and listing of more multinationals on the stock exchange would boost its liquidity and enhance the participation of local investors.
The financial experts were reacting to the bearish trend in the equities market occasioned by exit of foreign portfolio investors to countries with higher return on investment. Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, said the stock market had been bearish since the beginning of third quarter due to lack of economic activities. Tella said the economy had not picked up fast from recession due principally to long delay in the passage of the budget by the legislature. He said the current withdrawal of foreign investments, engineered by high interest rates in the US added fueled the slide in the capital market.
According to him, only quick implementation of the budget and payment of domestic debts could halt the slide. He said new investments in the economy would improve public confidence in the market. “If the capital outflow caused by the US monetary policy is short-lived, the Nigerian stock market can rebound.
“What is happening is referred to as contagion effect and can only happen to an open and dynamic stock market,” Tella said. He added that the Nigerian capital market would require more advanced, proactive and dynamic instruments to manage it. Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said local investors would be attracted to the market with the listing of new companies. Kurfi also stressed the need for regular customer forum and investors education on the gains and rudiments of the stock market. He explained that foreign investors, aside investing for returns consider foreign exchange rate, political and liquidity risks while investing in any market. Kurfi said that these major issues needed to be addressed to attract more foreign Investors in the Nigerian market. He said that foreign exchange risk could be mitigated with good foreign reserves, while liquidity risk had to be available in any stocks both at the time of purchase and sale. Kurfi said political risks could partially be managed with early primaries of various parties to reduce political uncertainties.
(NAN)
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