Experts task government on monetary policy rate

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Central Bank of Nigeria

• Wants its review to buffer stock market’s capital
• Investors’ lose N418b in one month amid profit taking

Capital market experts have called for downward review of the Monetary Policy Rate (MPR), by the Monetary Policy Committee (MPC), to accelerate economic recovery and attract more funds to the stock market.

The stakeholders, who spoke in an interview with The Guardian, admitted that the market has fared well this year compared to three to four years ago.

They however argued that further downward review of the rate and other policy implementation would make the equities market more attractive to investors and issuers as well as direct more funds into the market.

Indeed, the stock market, which opened the year on a negative note, has made a gain of N2.205trillion for the first half of 2017. The Nigerian Stock Exchange All Share Index (NSEASI), which measures the performance of the equity market, appreciated by 6,242.86 points to close at 33,117.48 on June 30, from 26,874.62 at which it opened for the year.

Similarly, market capitalisation gained N2.205trillion, up from N9.247trillion at which it opened trading on January 3, 2017 to close at N11.452trillion for the half-year.

However, further breakdown of market performance showed that market capitalisation also dropped by N418billion or 3.4 per cent from N12.655trillion at which it opened transactions on Tuesday, August 1, 2017 to N12.237trillion. While the All share index depreciated by 1,216 points from 36,720.62 to 35,504.62.

A stockbroker with Delloit Securities Limited, Tunde Oyediran, maintained that unless the Monetary Policy Rate is reduced, the equities market would continue to face challenges.

“The market has fared well this year when compared to three to four years past. We see rebound in some stocks, which robbed off on general market performance.

This could be attributed mainly to introduction of investors and export window to foreign exchange management. This implies, if policies, monetary and or fiscal, are right, it will lead to attraction of funds into our markets.”

The President of proactive Shareholders Association, Taiwo Oderinde, said the market has performed well this year with a total capitalisation of over N12trillion.

“Our expectation is that the growth will be sustained. Also, government should reduce the monetary policy rate; compel some big companies like MTN, Glo among others to list on the Nigerian Stock Exchange. There is also need for the investors’ education, proper regulations, better Laws to through NASS to grow the market.”

An independent investor, Amaechi Egbo, noted that the stock market is supposed to play an important role in the economy in the sense that it mobilises domestic resources and channels them to productive investments.

“The stock market performance is supposed to illustrate the state of the country’s economy; if stock prices start to fall, economic depression is likely to take place and, conversely, rising stock prices show possible economic growth.

“The market have performed well this year with a total market capitalisation of over N12trillion. To consolidate on this performance, government must look into the issue of reducing the interest rate because it robs equities market of funds. This would also attract more issuers and companies to list on the exchange.”