David Adonri, Managing director/ CEO, Highcap Securities Limited, in this interview with Financial Vanguard, spoke on some actions taken by the apex regulator of the Nigerian capital market, investors’ confidence and his expectations on the third quarter corporate performance in 2017, among others. Excerpt
WHAT is your take on some actions taken by the Securities and Exchange Commission, SEC against some operators in the Nigerian capital market in recent times?
Activities of Capital Market Operators (CMO) are firmly regulated because of the delicate and sensitive nature of the capital market. To sustain investors’ confidence and uphold the trust and integrity of the Nigerian capital market, the regulators, especially, apex regulator, SEC enforce the rules and regulations that guide operations vigorously. Contraventions are mercilessly dealt with.
There is zero tolerance for infractions hence the severe sanctions on lawless CMOs and their principal officers. Stringent measures are necessary to sanitize the Capital Market and enhance continued issuers and investors confidence.
How will you assess the third quarter results of companies already released?
The third quarter results of companies should be better than half year since economic indicators have largely been positive. The business environment has become more conducive especially for banks to recommence import finance and other short term projects. The agriculture sector will also continue its impressive run since their protection by the Central Bank of Nigeria, CBN is still in force. Manufacturing may also improve due to availability of hard currency to import raw materials. The equities market which bounced back in the second quarter is expected to close the year on a positive note.
Remember that a lot of the first half results were impressive, part of the reason the market went into a rally in the second half. You know the rally started around April because those results were impressive.
How has the market fared so far and has investors’ confidence returned to the market?
Investors’ confidence, if anything, is improving when compared to last year. One of the best things that happened to the economy was the investors and exporters forex window that was opened. For foreign investors, the ease with which they can repatriate their money is more important to them than the money they are making. So, as soon as that investors’ window was opened, a lot of things began to change. You will also observe that the window was patronised heavily and it is still being patronised.
Do you see the banks dominating other sectors given the results released so far?
Yes, the banks are likely to surpass other sector as we have seen some improvement in the economy.
Some of the banks even came up with interim dividend and the market responded very well. So, the banks in aggregate should perform well more than they did last year. There should be positive development for the sector because most of them have started e cleaning up their books.
The good thing is that they have the profit they are using to clean up their books. So, all those non-performing loans are now being removed from their books so that their books will be cleaner and their profit will be more reliable and ascertained. So, they are moving in line with prudential guideline.