By William Jimoh
Adewale Abiodun: We are affirmative about market condition. It is our prayer that the market bounces back. This is because as investors, we are always affirmative and positive about the condition of the market, since it is when the market is progressing that we make money.
We experienced the bad phase of the capital market during the last meltdown and our prayer is that there should not be a repeat. We also hope that this improvement we are seeing today in the stock market will be sustained, while the Nigerian Stock Exchange tries to restore shareholders’ confidence, most especially the minority investors.
We don’t want to talk about the negative thing when it comes to the market because we have done enough of it in the last few years. This is because it is when the market is booming and doing well that we can say that we are expecting declaration of dividend and possibly bonuses, the reason for our coming into the market in the first place.
To me, I will say that the market is progressing no matter how slow it may be. We have left where we used to be in the last few years, but we are not there yet. And just as there may be some investors that may dispute this, I believe that a huge number of investors can see this and will share the same mindset with me on this matter.
Take for instance; some shares that I bought at cheaper rate before now sell at high prices. Some shares I bought at the rate of N200 some times ago are now selling at higher and profitable price. I currently have 200 units in Nestle and can’t believe that N200, 000 is the value of my share now and that is only with Nestle.
If I have to sell those of other companies where I have higher units of shares whose stocks are doing well, like Guinness, Nigeria Breweries and Lafarge WAPCO, that means that I will have enough money to throw around for whatever purpose I want. And that is our wish; that the improvement might be progressive and not retrogressive.
But as we are enthusiastic about the growth of the market, we cannot run away from the reality that a lot still have to be done. And the good thing about the market currently is that the regulators are working tirelessly to ensure sustainability of the growth that is currently being experienced.
Also, the exchange has put series of measures in place to sustain the growth, as well as restore confidence in the market and all these innovations and programmes show and speak volumes when it comes to their commitments to protecting the market from going down while championing the interests of minority shareholders.
(Adewale Abiodun is the Chairman of Ogun State Chapter of the Nigerian Shareholders Association)
Sonibare Waheed: We are not there yet.
Though currently we can see some price appreciation in the market, but in real terms, the minority shareholders are not really benefiting because if you look at what we call the artificial effect of the price, you can see that majority of the money available in the market today is from foreign investors. Because of this, one needs to be very careful when it comes to investing in the capital market.
On my personal opinion, the confidence is not yet there because majority of the people that left the capital market prior to and after the meltdown are not back in the market and until a good number of this category of investors are back; we cannot really say that the market has gained the confidence of investors.
What we have in the market today is just the influence of the market makers. Their shares are selling at high prices, but the dividend is not worth it. For instance, Nestle is selling around N1500 per unit, but it will be unwise of an investor to buy such stocks now simply for expectation of N20 dividend.
And that is not a good indication for the growth we long to see in the market. For instance, there is what we call capital inflow (increase in the amount of money available from external or foreign sources) which has been affected by the activities of mutual funds. Because they are the ones draining the money from the capital market due to the fact that most investors now prefer to keep their money with them knowing that if they decide to invest on their own, their money can go down the drain.
So to me, enough confidence has not been seen in the market, especially when you consider the level of confidence.
Another reason is that, if you look at the collaboration that existed between the Nigerian capital market and local investors before the meltdown, compared to what we have today, they are not good indications as the market is not popular enough to draw attract new investors into the market.
It will even be unwise for any one at this moment to think of investing in the capital market with the aim of money making. You may want to ask why we are still in the market till now when most of our people have lost confidence in the operation of the market.