By Providence Obuh

Afrinvest West Africa Limited has commended the Nigerian Stock Exchange (NSE) over the various reform initiatives adopted to enhance investor’sa confidence in the nation’s capital market.

Afrinvest believe that the factors that influence investors’ confidence in the market transcend macroeconomic and socio-political considerations.

In the Afrinvest 2012 Nigerian Market Outlook “Diamond in The Rough” made available to Vanguard, the company pointed that in the last one year; the Nigerian stock market has undergone wide-ranging regulatory and “housekeeping” reforms and initiatives that are geared towards restoring investor confidence in the Nigerian bourse.

“The need to capture a significant portion emerging market portfolio inflows necessitates a quantum leap in regulatory and administrative oversight, including high corporate governance standards, on the Nigerian bourse in line with acceptable global standards.”

The company revealed that having initiated varied reforms, which are targeted at enhancing fair and transparent market place, enhanced investor confidence, and improving market depth, the bourse is on course for boosting investors’ confidence going forward.

Revealing further, Afrinvest stated that policies such as the introduction of market making, securities lending, short selling and introduction of ETFs need to be accompanied with effective regulatory oversight, while their general acceptance and participation by the investing public will largely depend on improved investor education going forward.

However, the company, estimated a GDP growth rate of 7.0 per cent and 7.5 per cent for the country’s economy in 2012 with increased contribution from the non-oil sector especially agriculture, telecoms and financial services.

“We expect the CBN’s banking sector reforms to berth in 2012, giving further impetus to bank lending particularly given the mild uptick in credit growth observed towards the end of 2011. We envisage less aggressive fiscal tightening measures in 2012 even as reduced government borrowing should bear positively on the domestic equity market.”

“Given unfolding realities in Nigeria’s macroeconomic backdrop, as well as anticipated global economic conditions, our focus in 2012 remains on fundamentally strong and countercyclical companies, with strong cash generating capacity and strong management teams,” it added.