Hopes that the inauguration of President Muhammadu Buhari’s cabinet would spur activities and restore the nation’s bourse on a path of sustainable gains have been dashed, as investors’ wealth depreciated by N151 billion 14 days after their inauguration.The development has become worrisome to stakeholders that hitherto, anticipated a major resurgence under the present administration to make up poor performance in the first term of office.
Since the inauguration of Buhari on May 29, 2019, investors said they are yet to identify any clear value addition or policy direction for the capital market by his government.
Indeed, with many equities currently undervalued and selling at a huge discount alongside yields above the inflation and treasury bills’ rate, there is need for the economy to be properly structured and given a new direction so that all sectors of the economy would recover and impact positively on the market.
At the 2019 PEARL Awards Press Briefing in Lagos, the President of the group, Tayo Orekoya, admitted that the market has not felt the positive impact of the President’s inauguration and ministerial appointments.“There was a delay in constituting the cabinet and now that the cabinet has been fully constituted, we have not seen the impact on the market.
“We need to have a strong economic team by the government that would put in place fiscal and monetary policies that are sustainable over time, which would drive activities in the real sector of the economy and positively impact the market. “We want to see a situation where by companies begin to respond to this, not only having the cabinet, but also having economic team that would put in place the right policies.”He added: “After the 2019 Award project, slated for November 24, 2019, there would be a review of the parameters currently being utilised for the assessment of quoted companies.
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion said until investors start seeing certain policies being formulated from different ministries, the market would not record any meaningful recovery.“The cabinet itself is weak, but we can not write them off completely. They may stumble on a policy that can help revive the economy. Until we see these policies, nothing will happen on the economy and by extension, the capital market.
“Any investor is investing on the future and that future is hinged on governmental policy direction and until investors start seeing this direction, the market would not witness any reasonable rebound,” he said.
The Secretary of PEARL, Lekan Adekoya, agreed that the performance of the market remains relatively unstable. According to him, the market performance has nose-dived in recent past due to decline in stocks occasioned by massive sell off and dumping of shares by both foreign and local investors.He added: “In the light of the above, it is our considered opinion that the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) need to do more towards investor education to rebuild confidence in the market.
The Nigerian stock market’s performance is dependent on the activities of the quoted companies and where the fundamentals of these companies are depressed, it would ultimately have a multiplier effect on the market.To ameliorate the situation, the stakeholders stressed the need for government to form a strong economic team that would formulate fiscal and monetary policies capable of sustaining the economy over a long period.According to them, the measure would help drive activities in the real sector, improve the overall performance of listed firms and restore investors’ confidence in the market.