In view of the current downward trend of basic indicators of the Nigerian Stock Exchange (NSE), acting Director General of the Securities and Exchange Commission, SEC, Ms. Mary Uduk, says investors’ fears ahead of the 2019 general elections may have been exaggerated after all.
Uduk, who spoke while responding to questions from journalists on the sidelines of the just concluded World Bank/IMF Annual Meetings in Bali, Indonesia, lamented the situation that has made some investors to hold back their investments.
Others, she continued, have sold, or adopted a wait-and-see strategy until after the elections, but assured that such is nothing to worry about, following which she said the Commission is mapping out strategies to build confidence in the market, while growing the share of retail investors in the entire space.
The reassurance has become necessary at a time the benchmark NSE All Share index has persisted in the southward direction since around middle of January, as investors seek safer havens, or prefer cash, in the long wait for the outcome of next year’s elections. In the process, shares of companies listed on the Nigerian stock market have lost 15.13% year-to-date, while market capitalisation is down by about N1.79tr, or 12.98%. The situation is a lot worse, if the new company listing and rights issues, among others are computed thereto.
According to Uduk, “we understand the importance of foreign investors for market efficiency, liquidity and transparency. However, it is also important for us to develop local investors by building their confidence and encouraging their participation.”
A lot of progress, she continued, has been made in the area of enhancing confidence in the market, including “risk based supervision, zero tolerance to infractions in the market, Complaint Management Framework among others.
“If you don’t tolerate infractions, investors will know that somebody is watching their back. We have other initiatives like e-dividend, Direct Cash Settlement which are all geared towards encouraging investors in the Nigerian capital market,” she added.
The acting DG said the SEC is exploring other avenues to deepen the market, including introduction of different products like derivatives, non interest capital market products and commodities. Already, she assured, rules of derivatives are been finalized, just as there is a standing Committee on developing a vibrant Commodity Ecosystem.
She also disclosed that the SEC is embracing technology innovation which is a major theme of this IMF/World Bank meeting.
Already, the commission, Uduk continued, is “working on automating a number of our operations. We are encouraging those we regulate to embrace technology and have minimum technological standards and encourage new innovators, especially FinTech.
“Fintech companies offering capital market products and improved processes are expected to collaborate with the Commission through some of our existing arrangement like the Regulatory Sandbox that we are currently working towards implementing,” she added.
With all these efforts and several others, she believes, the Nigerian Capital Market can manage some of inherent risks, while becoming deeper and in the process, realising its potentials.
Photo Caption: From left, Godwin Emefiele, the Governor, Central Bank of Nigeria (CBN); Acting Director-General, Securities and Exchange Commission (SEC), Ms. Mary Uduk; and Director-General, Debt Management Office (DMO) Nigeria, Mrs. Patience Oniha; at the just concluded World Bank/IMF Meetings in Bali, Indonesia, Sunday.
