By Oscarline Onwuemenyi
THE Director-General ofÂ the Nigerian Stock Exchange, Professor Ndi Okereke-Onyiuke, has alleged that the tools applied by international rating agencies to rank exchanges were to the disadvantage of the local stock exchange. Okereke-Onyiuke who was speaking recently during the Capital Market day at this yearâ€™s convention of the Association of Nigerian Physicians in the Americas (ANPA), in Abuja , said the Nigerian stock market has been recovering at a very fast rate compared to other markets globally.
She said, â€œUntil the market downturn, we have always outperformed many developed markets in the area of Return on Investment (RoI) in dollar terms as adjudged by the International Finance Corporation and the Standard and Poorâ€™s and other rating agency. We, however, feel cheated because this growth is measured in dollars, and while they use the official rate to measure other markets, especially in developed economies, they use the market rate of the dollar to measure the Nigerian market, and we all know how volatile the market rates are.â€
She said in spite of this obvious disadvantage, the NSE was still among the top five stock markets in the global performance index. â€œAs at today, we are number two in the globe as markets in most developed economies are yet to fully rebound. Our market would sustain this high performance,â€ she stated. She insisted that the downturn in the Nigerian stock market was not necessarily as a result of the global financial crises, but rather as a result of global panic.
According to her, â€œThe reason our market went down was not because the fundamentals were not there or that we did anything wrong. Rather, because so many Nigerians were exposed to news and information from global media like CNN, Bloomberg, they became afraid at what was happening globally and they began to dump their shares.
â€œIt is necessary to inform you that our market fundamentals have consistently remained strong as adjudged by strong corporate earnings, dividend payout, and bonuses from our quoted companies,â€ she stressed.
Okereke-Onyiuke noted that the Nigerian stock market had experienced a prolonged bearish trend, arising from the fall-out of the global market downturn.
â€œThis is because our market is no longer cocooned from the global market; we are fully internationalised,â€ she said.
She explained that at the peak of the global financial meltdown, the market lost about 40 percent of its value as total market capitalization declined from N12 trillion in 2008 to N7.4 trillion in March this year.
She, however, noted that the rise in investor confidence has put the market back on a steady path to recovery, which has seen an appreciation in the total market capitalization from N7.4 trillion to N9.45 trillion between April and May this year.
â€œToday, it is hovering above N8 trillion as many of our investors are taking profit regularly following market dynamism. Our market is resilient; we did not apply any stimulus, : she added.
According to her, many of the investors that suffered losses only lost in terms of value as their holding are still intact. â€œIt must be stated that even most of those who lost had earlier made huge profits in form of capital appreciation, dividend and bonuses.â€
The NSE DG further urged the doctors to take advantage of the low stock value to invest in the market, adding that the low market value of stocks should be an attraction. She said. There is no gainsaying that the market downturn has also created a buy signal as most of our shares are trading below intrinsic value, making it attractive to local and foreign investors.
â€œThe lesson is that in every disaster, there is always a silver lining. The disaster of the global economic meltdown is also an opportunity for many to tap into the market and reap the rewards when the market rebounds, as it is bound to.â€
Okereke-Onyiuke stressed that the NSE was dynamic and had expanded its Investor Protection Mechanisms through enlarged disclosure requirements for quoted companies and enhanced risk management strategy.
She added that the Federal government was mindful of the need for creating an enabling investment environment, as it has inaugurated a Presidential Steering Committee on the Global Economic Crisis as well as the strengthening of the National Economic Management Team