Capital Market Featured Finance

NSE, others commit to expanding retail investment opportunities in capital market

The Nigerian Stock Exchange (NSE), Nigerian International Securities Limited (NISL) and the Chartered Institute of Stockbrokers (CIS) on Monday commited to expanding retail investment opportunities in the capital market.

The trio made the commitment at a webinar organised by the NSE in collaboration with the NISL in Lagos.

It was also supported by the CIS and the Association of Securities Dealing Houses of Nigeria (ASHON).

The News Agency of Nigeria (NAN) reports that the webinar was on “Capital Market Investing in a Digital Age”.

Mr Oscar Onyema, Chief Executive Officer, NSE, in his address, said that investor participation was crucial to sustainable economic growth.

Onyema said that the Exchange was committed to playing its role in advancing the Federal Government’s financial inclusion goals.

“Investor participation is central to the growth of sustainable development of any economy.

“NSE is committed to playing a critical role in the advancement of the FG’s financial inclusion goals.

“As part of our efforts to realise the objectives of the financial inclusion, we intend to facilitate conversations which will serve to equip existing and potential investors with the necessary skill to effectively manage and grow financial resources at their disposal.

“In these engagements, we will also expand the retail investment opportunities available in the capital market and the channels through which they can be accessed,” Onyema said.

The CEO of the Exchange also hailed operators and investors in the capital market for their resilience, with the COVID-19 pandemic.

“The outbreak of COVID-19 adversely affected the global economy in many ways and at different magnitude.

“The Nigerian capital market was also negatively affected, with the market witnessing a downturn in Q1 of this year.

“However, the market rebounded in Q2 and as a result the NSE all share index has recorded a 18.9 per cent increase from its position at the end of March.

“The market also witnessed the growth in the percentage value of equity transactions contributed by retail investors, currently at 29 per cent from 21.8 per cent in 2018 and 24.72 per cent in 2019,” he said.

According to him, these highlight the market’s resilience in time of adversity and is a testament of market stakeholders’ ability to adapt.

Onyema said that digital technology played a significant role in achieving the positive results recorded in the NSE so far.

He said that technology had helped to make significant services more easily accessible.

Mr Laolu Martins, Managing Director and Chief Executive Officer, NISL, said that it had become imperative to ensure that retail investors were made aware of the opportunities inherent in the capital market.

Martins said that for retail investors, navigating through the web of processes in the capital market was usually difficult, thereby discouraging them from investing.

He said: “The general belief is that retail investors are often left behind and do not have enough knowledge on the workings of the capital market.

“It is interesting to note that the NSE has over the years taken time and work to ensure that retail investors are carried along and aware of the various opportunities inherent in the NSE.

“NISL is a securities trading company, financial advisory service, offering consulting solutions to corporate bodies across the value of activities on the stock exchange.

“In order to invest properly, all investors need to carry out some sort of financial planning, no matter how small or big.

“We realised that for retail investors, it is usually difficult for them to navigate through these web of processes and other issues that create a bottleneck or discourage investors.”

Martins said that some processes that create difficulties for investors include budgeting, investment, savings, risk management and liquidity management.

“At NISL, we have enough expertise to ensure that we help our investors navigate through this web of terms and processes to ensure that their investment is rewarding,” he said.

Martins said the reason for the webinar was to expose some of the investment opportunities for retail investors.

“This webinar is to enlighten the investing public, retail investors, that they can buy bonds in the NSE and it is like lending your money to a company or a government entity.

“It is advisable that retail investors should approach their stockbrokers to guide them in which bond they should invest in,” he said.

Mr Femi Balogun, Head, Market services Department, NSE, spoke on the importance of market data in guiding investors’ decision.

“Market data is important to the investment of an intending investor.

“Some people are good at picking stocks, but If you use data to drive your decision in conjunction with your expertise, you make a better informed decision on your investment,” he said.

Mr Olatunde Amolegbe, President of CIS, commended the NSE, while pledging the Institute’s continued support to drive an inclusive financial system.

Amolegbe said that the Exchange had always provided avenues that would support and ensure a seamless investing process for retail and other investors.

Analysts Rule Out Interest Rate Cut, MPC Decides Today

As members of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) conclude their two-day meeting today, some economists and financial market analysts have predicted that all the monetary policy tools would be left unchanged.

They, however, stressed the need for the committee to focus on introducing policies that would encourage investments as well as help control inflationary pressure.

The analysts made this prediction yesterday in separate interviews with THISDAY.

At the last MPC, the committee had retained the benchmark Monetary Policy Rate (MPR) at 12.5 per cent; the cash reserves requirement was also retained at 27.5 per cent and the liquidity ratio at 30 per cent respectively.

The Head of Research at United Capital, Mr. Wale Olusi, advised the MPC members to focus on bringing down inflation as well as to push for policies to drive and encourage foreign investments in order to improve forex liquidity.

Olusi said: “I doubt there would be changes, but definitely, the dislocation in the system is worrying. The rising inflation rate at 13.2 per cent at the moment and the fact that it is going to be higher in September is anti-growth and is likely to deepen the recessionary tendencies.

“There is no way the CBN would be able to attract foreign capital if the interest rate is at the level it is now when compared to inflation rate. We have serious economic problems with growth which contracted by six per cent at the second half of the year and we have serious issues with forex liquidity considering the fact that trade deficit is deepening and import is twice the size of export.

“So, there is no way you are going to be able to sustain your import bill if something drastic is not done about attracting foreign capital or cutting down on import.”

The Chief Investment Officer, Sigma Pensions, Mr. Pabina Yinkere, said: “At the September 2020 MPC meeting, I expect the committee to leave all parameters unchanged. We observe that the focus now is on how to catalyse economic growth in the wake of COVID-19 and the resultant slump in Q2 2020 GDP numbers.

“In this view, price stability may likely take the back seat as the CBN continues to pursue low interest rates and its drive to increase bank lending to the real sector of the economy. As such the MPC may be willing to sacrifice the current rising inflation for growth at this time.

“Since the CBN began its use of the loan-to-deposit ratio to encourage banks to lend, we have seen an increase in lending to various sectors of the economy, which is a welcome development, and as such expect the CBN to double-down on this and other growth-stimulating measures.”

Also, the Head, Investment Research at Afrinvest, Mr. Abiodun Keripe, said the most pertinent focus should be on the forex environment.

According to him, “I expect the committee to maintain status. The CBN has been using other unorthodox measures to achieve its price and financial stability objectives. I do not expect a rate cut due to the need to balance these objectives following continued inflationary pressures and forex challenges on one hand, and negative economic growth on the other.

“A rate cut potentially has implications on private investment and capital mobilisation needed to support the massive domestic financing gap. The investment climate is dealing with negative real returns with the August inflation rate at 13.2 per cent. The current inflation pressure is driven by structural challenges such as border closure, food shortages, VAT increase, and the on-going energy reforms.

“Reducing the MPR does not help to resolve these issues. On the flip side, tightening would hurt the need to stimulate real sector growth via credit expansion given that the economy is running at a risk of recession already.”

An investment professional, Mr. Ayodeji Ebo, also anticipated that the MPC would not adjust all its monetary policy instruments.

Ebo explained: “The CBN would still maintain the status quo because since the last time they adjusted nothing significant has changed and there is a limit to what the MPC adjustment or policy can do. To that end, I feel they would still retain all parameters at the current level.”

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