Capital market experts list expectations from government

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Nigerian Stock Exchange

Bemoans high interest rate, parlous infrastructure others
Stakeholders in the capital market have identified high interest rate, parlous infrastructure, multiple taxation, and many others as major factors impeding growth of the market. They urged the current administration to focus more on investors’ friendly policies and enable the market to play its crucial role in the economy.

With the resumption of President Muhammadu Buhari in office after 100 days of medical leave, stock market experts stressed the need for the his administration to urgently tackle the issues.

The experts, who spoke in an interview with The Guardian, noted that the stock market has been relegated to the background over the years, adding that addressing these issues would cause resurgence in the market, as well as revive the weak macroeconomic scenario.

Specifically, the President, Institute of Capital Market Registrars, Bayo Olugbemi, stressed the need for government to tackle the issues infrastructure, noting that this would enable industries to work on full capacity and generate employment.

Furthermore, he noted that all developed and emerging economies have used industry as the key driver of modernization, adding that industry creates the platform that attracts capital and technology.

“Infrastructural development, which includes Power, Roads, Rail emong others must be addressed. If all of these are in place, many industries will be working to capacity, employ more workers and make more money which may encourage primary market fund raising.”

The Managing Director of High Cap Securities, David Adonri, noted that for the capital market to play its crucial role under this administration, inflation and interest rates must be in lower single digit.

He pointed out that the market must be representative of all sectors of the economy, noting that policies and programs must be in place to reactivate the primary market where capital formation occurs.

According to him, the main reason why the capital market has been witnessing low patronage is attributable to the impact of both inflation and the uncomfortable high exchange rate regime.

He further explained that high interest rate hits the foreign portfolio investors as they face exchange rate risk with their investment, especially, with respect to repatriation of dividend or capital or both.

“High exchange rate and inflation are the twin evil that afflict the capital market and indeed every economic endeavours. These two variables introduce a high level of uncertainty to the price structures of the market.

“They stifle savings which is the fulcrum of investment. Any phenomenon that negatively impacts on savings reduces the quantum of available investible fund for Capital Market investment.”

The President of Dynamic Shareholders Association, Alex Adio urged government to pursue policies that would favor investors.

“Government must work out policies that will be more favorable to investors, check multiple taxation, put searchlight on operations of the regulators and check the operations of so called FRCN code which was claimed to have been suspended but still in operations underground to milk companies and investors.”