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‘Regulatory synergy critical to capital market recovery’

By Nkiruka Nnorom

Operators in the Nigerian capital market have said that synergy among the various arms of the financial markets and industry regulators, including the Central Bank of Nigeria, CBN, the Securities and Exchange Commission, SEC, the Nigerian Stock Exchange, NSE, and the Pension Commission (Pencom) is required to sustain growth recovery in the market.

File photo: The  floor of Stock exchange
File photo: The floor of Stock exchange

The NSE All Share Index (ASI), which fell from an all time high of 66,371.20 as at March 2008 to 20,827.17 as at December 2009, due to global financial crises, as at Wednesday December 24, 2014 had risen to 34,428.82 after climbing to over 40,000 points a year earlier.

Similarly, the market capitalisation which fell from an all time high of N13.5 trillion as at March 2008 to less than N6 trillion as at December 2009, by Wednesday December 24, 2014 had also risen to N11.402 trillion after hitting over N12 trillion a year earlier.

Despite the lingering effects of the global financial crisis, in 2012, the Nigerian capital market was able to return its strongest performance since the 2008 crash and topped that the following year. The All Share Index (ASI) grew 35.45 percent and the equities market capitalization grew from N6.54 trillion to N8.98trillion in 2012. the ASI grew further by 47.19 percent in 2013 and equity market capitalization jumped from N8.98 trillion to N13.23 trillion, induced partially by foreign investors looking for higher returns in emerging and frontier markets.

In her presentation at the Capital Market Correspondents Association of Nigeria (CAMCAN) workshop recently, Mrs. Oluwatosin Sanni, the Chief Executive Officer, UBA Capital Plc, said that the collaboration was imperative for sustained development of the capital market and prevention of the regulatory lapses experienced previously.

She also emphasized the need for implementation of international best practices regarding transparency, corporate governance and reporting standards as well as implementation of robust risk management systems.

She noted that by collaborating and taking actions geared towards growth, Improve liquidity, boost investor confidence, raise issuer confidence and attract new listings.

Furthermore, increased collaboration would assist in attracting and maintaining foreign investment.

According to her, it would, facilitate product development and shift dependence on bank funding to capital market funding

Speaking the recovery achieved where the All Share Index has grown to over 30,000 points and market capitalization rising to over N11 trillion, Sanni stated that recovery was also as a result of improved confidence in the market and it’s leadership, a much stronger regulatory environment and favourable policies by regulators and key stakeholders and implementation of market making programme that provided slightly improved liquidity.




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