The upcoming general elections as well as the effects of the declining oil price have been identified as challenges that must be addressed in the Nigerian capital market in other to sustain the market recovery.
The group chief executive officer of UBA Capital, Mrs Oluwatoyin Sanni, highlighted these challenges while delivering a paper titled “Sustaining Capital Market Recovery” at the Capital Market Correspondent Association of Nigeria (CAMCAN) workshop over the weekend in Lagos.
Sanni attributed the on-going investors withdrawal from the market to the 2015 general election, saying, “Some international and local investors have withdrawn their investments in anticipation of the outcome of the election.”
Sanni noted that the drop in oil price and perceived policy inadequacies also affected the international investors confidence, adding that relatively low daily traded values and low turnover velocity are still a hindrance to large investors.
She added that the Nigerian economy is greatly exposed to geopolitical, geo- economic and currency risk which is forcing foreigners to withdraw from investing, and stressed that the insecurity in the country is also a challenge to the Nigerian capital market recovery.
According to Sanni, the low financial literacy and low financial inclusion which also causes apathy to retail investors are also hindrances to the growth of the capital market, adding that the lack of diversification options as few products are available and financial sector still dominates the trading activities also affects the growth of the market.
She also said that the Nigeria Pension Funds Administrators (PFAs) currently have limited exposure to equity market adding that PFAs have the opportunity to greatly increase their equity exposure as this will increase long term returns to contributors, encourage the Initial Public Offer (IPO) market as there will be an increased absorption capacity and improved liquidity.
Also speaking, the CEO of NSE, Oscar Onyema represented Mr. Bola Adeeko, head, Corporate Services Division of the exchange said “Investors’ confidence is slowly being rebuilt, we still have a long way to go and many challenges to overcome.
“It is our hope that we will continue to play our various roles in the Transformation of the Nigerian Capital Market and this same measure of commitment will lead us to all-round market improvement in 2015.”
Source : Leadership