The Alternative Securities Market, ASeM, of the Nigerian Stock Exchange, NSE, a window for Small and Medium Enterprises to access the stock market has been marked by inactivity. Over the years, the companies listed under the sector hardly enjoy investors’ patronage as ASeM index lacks history of movement. In this interview, Mallam Garba Kurfi, Managing Director/CEO, APT Securities & Funds Ltd, provided an insight to lack of activity in the sector. Excerpts:
By Nkiruka Nnorom
THE Alternative Securities Market, ASeM, of the Nigerian Stock Exchange, NSE, has been marked by inactivity as the ASeM index that measures performance in the sector is always stagnated. What in your opinion is the reason for the inactivity in the sector?
The truth of the matter is that those companies that are listed in the ASeM are more like moribund. They are not active in terms of releasing their results. What the alternative market is supposed to be is the stepping stone to the main market. A company that is aiming to go to the Main Board will first be listed there, and after it has demonstrated some level of competence, it will be graduated to the main market, but that is not the case in our country. If you look at it, for the last three to four years, no single company has moved from the alternative market. Rather, the companies will want to jump from the starting point to the main broad.
Segment of the market
Look at Medview Airline and Jaiz Bank, both of them registered in the main market. Ordinarily, our alternative market is supposed to be like a stepping stone. But what do you see in Nigeria, everybody wants to go straight to the main market and that is why you see that there is no activity in that segment of the market. Those companies there have been there for over 10 years and in terms of buying and selling of shares, those companies are nothing to write home about.
You are invariably saying that the sector has not justified the reason for its existence.
Honestly, that is the truth of the matter.
Sometime ago, the NSE appointed Designated Advisers and market makers for the companies listed in the sector. Going by what is going on in the sector, will you still say that the advisers are doing their jobs?
The truth of the matter is that those advisers were appointed after those companies were listed in the stock exchange. Assuming the designated advisers were introduced before the listing of the companies, compliance would have been more easier for them. That is why there is little compliance from those companies because since they are already listed, they are not willing to improve from what they are.
We are not looking inward; if we are looking inward, many companies that are outside, we would have brought them there, nurture them and then transform them to the main market. That is what the London Stock Exchange, LSE, is doing. They focus on companies that have growth potential in a given industry, they identify the companies and make sure those future stocks are listed.
I think if the stock exchange can do the same thing, it will be better. If you look around you, you will see some companies that very promising. Today, where are they. Slot for instance, started very small but today, they have many offices. There are so many companies that are gradually coming up, but we do not pay attention to bring them into the market. These are companies that if you bring on board, they will gradually move from the alternative to the main market.
What do you suggest should be done to attractive the SMEs to be listed on ASeM because that sector is meant for them?
If the LSE can invite the CEO of Beloxxi Industries, makers of Cream Crackers Biscuit, for a presentation on his company. Why can’t we do the same thing here in Nigeria. What stops the Nigerian Stock Exchange from inviting Slot, Beloxxi, Sigma Pension and all the other companies that have growth potential to come and make presentation, see the market and gradually woo them to list in the market. Everyday we invite this and that to come and ring the closing bell.
How many prospective companies from the SMEs have we invited their chief executives to come and ring the trade closing bell. These are the issues, you have to go out to them. The stock exchange should identify those companies that have good prospect and bring them to list on the alternative market, bring them into the system and gradually, they will metamorphose into the Main Board.
What is the role of the stockbroking firms in wooing these SMEs to the market?
Look, let me tell you, bringing companies to list is not the work of dealing members. It is the work of stock exchange because it is the exchange that provides the platform. What stops them from having breakfast with the chief executives of the SMEs and inviting them to ring the bell and show them the window of getting into the exchange so that they will be listed. If a company is listed, who gets the fee, is it not the stock exchange? How much is my commission? Therefore, the one that provides the platform is the one that is supposed to invite.
Let me give you an example, Vanguard has been publishing for a long time. Why don’t they invite the MD of Vanguard to come and ring the bell. What stops them from inviting Thisday Newspaper to come and ring the bell. Punch is there. What stops them from inviting these companies to list on the ASeM even if they do not want to list on the Main Board. If you go the developed markets, you see that even Newspapers are listed.
Apart from Daily Times that was listed under the government, no other newspapers is listed. Daily Times is trading today, but it is not listed. Afromedia is listed but what of the rest. You have to invite all these companies, liaise with them, discuss and invite them to ring the bell and gradually they will be listed.
What should be done to make the already listed companies in the ASeM that have been recording zero activity attractive to investors?
If the companies are listed and they are dormant, it means that they are sick. Any company that is listed and you see no activity in it, it is either the company is dead or it is about to die because they don’t have anything to offer. If there is activity and a company declares bad result, it will not stop activity in the company. If a company has something to offer, people will buy the shares and when that is done, there will be activity in the stock. If you look at these companies in the alternative market, they don’t hold AGMs, they don’t publish their results. No first quarter, no second quarter, no last quarter. So how do I assess you?