Stakeholders disagree over investors’ role

As the capital market continues to witness impressive growth in both the bond and equities market, stakeholders have disagreed over the role of who should participate in the improved confidence of the Nigerian capital market that is engendered by regulatory rules and improved financial results of listed companies.

Foreign investors have increased portfolio investments in Nigerian market in recent months due to reversal of the United States’ Federal Reserve (US Fed) quantitative easing that has increased inflows from foreign portfolio investors stoking excess liquidity and depressing yield in the domestic bond market.

Shareholders at the bourse have stressed that the policies framework by the regulators threaten to expose retail investors to harmful investment risks’.

A daily newspaper had published a statement issued by shareholders, accusing regulators of creating policies in the Nigerian capital market that have alienated shareholders and gradually turned portfolio investment into elitist club-foreign investors

Speaking further to Nigerian NewsDirect on the regulator negligence, the chairman, Progressive Shareholders Association of Nigeria, PSAN, Mr. Boniface Okezie pointed out that the trend of investment between the foreign and retail investors have showed a huge demarcation and negligence of protecting retail investors’

He stressed that there is neglect in the capital market that poses a threat to the full recovery of investment by the retail investors who are the minority- they embrace the market fully.

“Until the retail investors embrace the market, we will continue to stay where we are. It is the retail investor that reduces volatility in the market because they don’t sell on time while the big time investors buy today and tomorrow they take their profits.

 “What the foreign investors are doing is to enhance their own economy. When a particular stock gets to its peak, they sale and carry the money away and that is the major reason stock drops to par value in our equities market,” Okezie explained.

Disagreeing with the shareholders, the chief executive officer of Express Discount Asset Management Limited, Mr. Atiku Kafaru told our correspondent in a telephone chat that there is need for Nigerian capital market to align with what is obtained globally.

 Kafaru said: “There is need for us to align with global best practices and I don’t see any policies that are against the retail investors that gives foreign investors advantage. That is what is obtained in other jurisdiction and we can’t continue to be local champion.”

He stated that for the bourse to join the world federation of Exchange, all parameters of investment must be considered before been listed or else it might jeopardize the registration of   NSE into federation of Exchange.

Hitherto, value of transactions at the NSE as at third quarter ended September 30, 2013 showed that foreign investors held 50.8 percent stakes to overtake local equities investors who staked 49.19 per cent in equities transactions. 

Of the total N1.58 trillion worth of transactions, foreign Portfolio Investments (FPI) at the equities market accounted for N801.25 billion while domestic transactions were valued at N775.77 billion in the period under review.

This implies that domestic transactions at the NSE which hitherto exceeded foreign participation declined by a slim margin.

The breakdown according to the bourse official website disclosed that FPI transactions which started at 36.9 per cent at the beginning of the year, increased to 49.9 per cent at the end of September 2013 representing an increase of 13 per cent.

Domestic transactions on the other hand decreased from 63.1 per cent at the beginning of the year to 50.1 per cent at the end of Q3, representing a reduction of 13 per cent.