•Woos Retail Investors, As Mutual Funds May Hit N1.5tr In 2020
Acting Director-General of the Securities & Exchange Commission (SEC), Ms. Mary Uduk, on Friday in Lagos challenged stakeholders in the Nigerian capital market to do more about attracting more domestic participation, especially retail investors thereby mitigating the huge influence of foreign players.
This, she noted, has become necessary because “the market’s performance is reasonably influenced by activities of foreign investors such that their instantaneous exit poses a challenge.”
Speaking at the forum of the Capital Market Correspondents Association of Nigeria (CAMCAN) sponsored by the commission, she admitted that “this is a problem faced by many other countries but efforts are continually being made by the commission to increase retail investors’ participation in the Nigerian capital market.”
Represented by the Head, Office of the Chief Economist at the SEC, Okey Umeano, the acting DG drew “a nexus between increased market participation and market efficiency.”
She noted that the stock market crises of the past continue to dampen and erode retail investor confidence impeding their return, especially when equity market capitalization fell from N12.13tr in March 2008 to N4.48tr by March 2009, representing a decline of 61.34%.
However, by 2010, the capital market started showing signs of recovery and by 2013 our market yielded its strongest performance since 2008. Nevertheless, by 2019 as the macroeconomy improved, the capital market also felt the ripple effect. The market closed in 2019 with All Share Index (ASI) and market capitalization of 26,842.07 points and N12.97 trillion, respectively.
This trend, Umeano noted, repeated itself in January 2020, when “the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by approximately 40%. These transactions stood at N165.14bn and N70.32bn, respectively.
“However, the domestic institutional transactions (N83.47bn) outperformed domestic retail transactions (N81.67bn) in January 2020. This trend re-emphasizes the need to increase retail investors’ participation in the market,” he stressed.
Despite the level of uncertainties, he urged that this should not be allowed to “dampen our resolve to attain our ‘ideal market’, the capital market of our dream,” assuring “the fundamentals of our markets and economy remain solid and promising as astute investors know.
“I, therefore, urge retail investors to leverage on this and invest in the capital market, which is one of the avenues to build sustainable and long-term wealth.”
He also expressed optimism that the market downturn currently, the value of Collective Investment Schemes (CIS) or Mutual Funds in the capital market will hit N1.5tr, from N1.2tr before year-end, urging retail investors to use the funds as a means to access the market.
“In any advanced market, the Collective Investment Schemes form a very big part of the market.
“We at the commission have discovered that some of the investors who lost their savings during the crisis in 2008 are low on confidence.
“That is the reason why we are encouraging retail investors to go through these mutual funds because they are set up and approved by capital market operators and the SEC and the SEC regulates them (operators).
“Currently the size of the segment stands at N1 trillion but we expect it to grow much higher.
“So we are urging retail investors and high net worth investors to use the mutual funds’ route to enter the market”, Uduk said.
Also commenting, Divisional Head, Economic, Research and Policy Management, SEC, Dr. Afolabi Olowookere, said mutual funds could grow to N2tr, even as about 480,000 investors have already keyed into that the investment segment.
“We still expect that size to get to N1.5 or N2 trillion and the reason is because it provides an avenue for retail investors to buy.
“The mutual fund may not have very high return but definitely it won’t have low return and with the SEC at the forefront of financial inclusion, we are pushing collective investment scheme because it brings some form of stability for investments,” as an avenue to build sustainable and long-term wealth.
Photo Caption: From left, Head Economic Research Securities and Exchange Commission, Dr. Afolabi Olowookere; Head, External Relations (SEC); Sufian Abdulkarim; Representative of SEC acting DG, Okey Umeano; and Chairman, Capital Market Correspondents Association of Nigeria (CAMCAN), Mrs. Chinyere Joel-Nwokeoma, during the Capital Market Correspondents of Association (CAMCAN) forum themed: Strategies to deepen retail investors’ participation in the Nigerian Capital Market sponsored by the Securities and Exchange Commission (SEC) in Lagos.
