By PETER EGWUATU

OPERATORS in the  Nigerian capital market have stated that for the equity market upsurge currently being experienced under the new leadership of both the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE), there is need to sustain the reforms being put in place by the apex capital market regulator.

The operators observed that the All-Share price index gained 18.9 per cent, closing at 24,770.52 in 2010, a significant improvement over the closing figure of 20,088 in 2009. Equity market capitalization has since increased by 37 per cent rising from N4.99 trillion in 2009 to N6.8 trillion in 2011, driven mainly by the listing of Dangote Cement.  The market closed with a market capitalization of N6.6trillion as at 30th March 2012.

As at the close of trading last week Thursday, the market closed with a market capitalization of N7.085 trillion and index of 22,218.44 points.

While assessing the improvements in the equity market, Managing Director/Chief Executive Officer of Investment Centre Limited, Mr. Ifeanyi Odunwa said, SEC under Arunma Oteh has brought discipline to the market, reduction of market infractions and a bit of stability in equity prices.

For a person coming from a multilateral financial institution, (African Development Bank), she brought professionalism, transparency, charisma and finesse to market. Though, she needs the collaboration of all staff in the commission, operators as well as other regulators in the market to execute the reforms being put in place to attain a world class market.

According to him, “SEC has  drastically reduced unethical behaviours  by market operators through the commission’s strategy of  name and shame  of  anyone that infringes the market and this has gradually brought back  investors’ confidence. The regulatory framework being put in place by the SEC in the past years should be sustained.

Commenting on  the performance of the market,  Mr. Tola Odukoya of  Dunn Lorren Merrified, an investment banker, said that  the intervention at  the  NSE by SEC,  which is one  of  the  steps taken to reposition the market for the positive current results, would  make  the Exchange  a better institution on  the long run.

He said, NSE has ensured strict enforcement of compliance with post-listing obligations. “In my opinion, one of the most important developments in the market is the step taken to reposition the NSE into a more focused institution. In this case, I think SEC played its key role as a regulator in facilitating the change of leadership at the Exchange. While this process is still work-in-progress, I believe the Exchange will emerge a more improved institution,” Odukoya said.

In his view, the former President of Chartered Institute of Bankers of Nigeria (CIBN) and Chief Executive Officer, Maxifund Investments & Securities Limited, Okechukwu Unegbu said, “Good results pushed the stock market indices as both capitalization and index appreciated greatly.

“This shows that the fundamentals of these companies quoted on the market are strong. I had earlier predicted that the market will record an upsurge in the second and third quarters and this is exactly what we are seeing now. To some extent, we should commend SEC for its effort in strengthening corporate governance and instilling market discipline. Although, there are more need for more rules and policies in terms of restoring confidence to the market.”

Furthermore, he explained, “One major thing that really affected the market during the crash was infractions and unethical practices by some operators which the SEC is prosecuting offenders. Besides that our market is still strong and this is the best time for investors to take advantage of the low equity prices to recoup the losses they had earlier incurred.”

Meanwhile, it seems there is consensus among operators and stakeholders that the prospects for the nation’s capital market have since the crisis in 2008, have never been brighter than this year. The market has recorded a Year-To-Date (YTD) of over eight per cent compared with a decline of over 16 per cent last year.

According to them, the market has began to enjoy favourable  sentiments from investors  given the  improved regulatory framework , which  is a culmination of  various efforts put in place by the Securities and Exchange Commission (SEC) in the past two years.

One of the factors attributed to the renewed patronage of the market by investors is the corporate actions coming from listed companies. Unlike before when investors used to wait for companies to release their results, months after the end of their financial years, investors have been savouring their dividends for the year ended December 31, 2011.

Even companies that could not declare dividends prepared their minds of the investors ahead through profit warnings to the market, a development that did not exist before. Also assessing the improvements of capital market under Oteh, some operators have opined that the commission has brought a bit of professionalism and transparency.

According to Odunwa “Oteh has drastically reduced unethical behaviours by market operators through her strategy of name and shame of anyone that infringes the market and this has gradually brought back investors’ confidence. Her various actions   since assumption of office has confirmed SEC as the ‘Headmaster’ of the capital market. All she needs to do is to resolve the division among her executive members. She should find a way of letting them know the kind of changes she wants for the commission so that they can key to her vision and work in harmony for the progress of the Nigerian capital market.”

In terms of strengthening the SEC, stakeholders observed that in the past two years, the Information and Communications Technology (ICT) of the commission had been revamped with modern productivity tools which have significantly enhanced the SEC capacity to discharge its market development and regulation mandate.

Apart from ICT improvement, the commission augmented capacity deficiencies in its core functions in 2011 with the employment of 52 academically distinguished young professionals comprising lawyers, economists, accountants and information technology specialists.

Concrete measures to reduce cost, prevent leakages and strengthen internal control within the Commission have also been deplored, just as the assistance of the United States Securities and Exchange Commission was received to conduct a peer review and implemented some of the recommendations in 2010.