Some capital market operators, on Monday blamed the Nigerian Stock Exchange (NSE) for the dismal performance of some listed stocks in recent times.
They said in an interviews in Lagos that the exchange’s over-dependence on foreign investors was a major cause of the decline in the fortunes of local investors in the market.
Mr Emmanuel Eze, Managing Director, Perfecter Investment Ltd., said the bears were having a free reign in the market dominated by the foreign investors.
Eze said the exchange had been disconnected from retail shareholders/local investors and depended solely on foreign investments..
“When about 70 per cent of the investors in the market are foreign investors, it means that the market is being dominated by foreigners.
“The NSE doesn’t have a blueprint to develop local capacity for long term capital formation. The preference is to hand over the economy to foreign investors,” he said.
Eze noted that the operators were concerned about the free fall of equities in the last couple of weeks, stressing that most stocks had lost more than 30 per cent of their value.
Mr Charles Fakrogha, Chief Executive Officer, Foresight Securities and Investment Ltd., observed that local investor’s confidence in the market had been dashed due to government’s policies.
Fakrogha said that foreign investors were being paid more attention in the market, against the domestic investors.
According to him, government should create incentives and also inject more funds into the market in order to make it more active, vibrant, so as restore investor confidence to the market.
He also said that only the government had the capacity to revive the activities in the nation’s bourse, stating that private investor’s as presently constituted did not have the capacity to reinvigorate the market.
Mr Chineyem Anyanwu, Managing Partner, Dependable Securities Ltd., attributed the bearish development in the market to the exit of foreign investors following JP Morgan’s threat to de-list Nigeria’s bonds from its emerging markets bonds’ board.
Anyanwu said the JP Morgan’s pronouncement had scared some foreign investors from investing in the capital market and the economy generally.
He noted that the negative attitude of foreign investors to the market, was because of their over concentration on capital appreciation.
“The foreign Investors can no longer wait for the market to properly re-position itself and that is why profit taking has been a major contributing factor to the bearish market
“They are always on the outlook to withdraw the money from the Exchange any moment they notice depreciation in the market”.
Anyanwu urged that investors be encouraged by the regulators to pay less attention to capital appreciation.
He also urged the domestic investors to seize the opportunity created by exit of some foreign investors to increase and re-position their stakes in the market.
According to him, capital market regulators should protect and develop the interest and confidence of the local investors in the market.
