Just this first quarter, two companies, Jaiz Bank and Med-View Airline, listed their shares by introduction at the Nigerian Stock Exchange, NSE, after a long lull in this market front. Alhaji Ola Yussuff, Managing Director/CEO, Trust Yield Securities Ltd, in this interview, expressed optimism that this might continue as more companies continue to adjust to the economic realities on ground. Excerpt:

By Nkiruka Nnorom

This year has started well for the stock exchange with two companies already listed. Do you see more companies coming on board this year?

That is the expectation; we have started well and we expect that to continue. Obviously, there will be more.

Why do you feel strongly that there will be more listings?

It is a natural expectation. The market has been down for so long and everybody is waiting for the market to turn up and you now see a green shoot. After the green shoot, you then begin to see more light at the end of the tunnels. If for the past two to three years we haven’t been seeing any issue and this year, we have seen two or three, it is a good indication that things are beginning to take shape.

Does the fact that share prices of the two companies that have listed this year have started going down not support the argument by some people that low investors’ confidence is not supportive of new listings?

The market is always going up and down. After listing, you have to wait for their result; they have not put out any information and the market cannot start taking decision without any concrete information. We are getting into second quarter when companies are expected to release their results, these companies were listed in the first quarter. If you are listed in the quarter, the market will naturally wait for you to justify what you have said and for you to justify it, it is when you begin to release your result.

Alhaji Ola Yussuf, MD, Trust Yield Securities

So you have to wait until June when they have released this first and second quarter results and the market is now convinced that all these people said they are going to do, they cannot meet it. When you say that they are going down, they are not, it is just that they are not going up as you had expected because they are still within their listing price. Something has to move the market; the market does not just move because you are new.

The market is moved based on information and there hasn’t been any information from those companies since they were listed. So, that is why you have not seen drastic movement in their price and at the same time, there hasn’t been drastic movement on a negative side either. It is not as if they have gone from N1.50 to N1.00; they are still within the range of five to 10 per cent changes.

Going forward, what do you think should be done by the regulatory authorities to sustain the momentum of listing we have seen this year?

The market has a cycle, a cycle of depression and a cycle when things will start moving up. So, we have gone through a cycle of depression when nobody was doing anything for the past three to four years. It doesn’t continue forever like that. So, we are now beginning to see (that is what I call the green shoot) evidence that the market is moving up.

When the market is moving up, it is not moving up simply because the authorities did anything in particular at that period. It is accumulation of what they have been doing all along when the market was down. So, you cannot really say it is one singular act that has turned the market, it is accumulation and the authorities will continue to do the same thing. Don’t forget when you say that the market is down, what does it really mean? The market has a shock and in every industry, people have to go back to their drawing board and try and see how they will produce to meet the new demand in the market. That is why it takes a cycle to do it.

If you look at those two companies that were listed, they were repackaged, they learnt from the experience of people in their industry, the mistake they made and they have now said ‘we have learnt from the mistake and we have found answer to it’. That is what depression is all about. Depression meant that some industries will go back, learn from the mistake that some people in the industry have made and try and come up with a solution and when the market sees that the solution is reasonable, then the market will support them.

And so you are going to see more and more companies that have been able to find solution to their problem that have been around for the past four years and when they have found the solution and say ‘we are now comfortable and we can produce’, they bring it to the market. So, more and more will come. Look at the banks, a year or so ago, everybody was seeing that some banks may collapse and all of that. But now, they have been adjusting, they might not yet be out of the woods, but the recent results that were published by Zenith and GT Bank and others do not justify the gloom that we have all been preaching. So it means that whatever challenge they have that was frightening all of us, they are now beginning to find answers to them.

So also are other sectors. So, you now begin to see sectors that if probably they were over dependent on foreign exchange, they will now begin to find local substitute, then these kind of industries will now begin to show signs, but when you have been over dependent on foreign exchange and you have not been able to find solution, then the chances are that kind of companies will continue to be depressed. You see that the companies that have adjusted to the economic realities and they have been able to reposition themselves, so more of those companies will come up and list.

You mentioned that the market is coming back. Can we really say that based on indicators?

The market capitalisation was far lower than what it is today. But now, it is ticking gradually. It might not be ticking up at a speed that we want it, but it is on an upward direction. It is an indication that the market is picking up.

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