Experts predict better capital market in 2015
Financial experts have predicted that Nigerian capital market will witness positive trends by the end 2015.
Although, the Nigerian stock market in 2014 closed on a negative note, with the key market indicator, NSE ASI, far below what was expected at the beginning of the year.
A financial expert said one of the key decisions and actions expected to shape market outlook and structure in 2015 is the recapitalisation exercise earlier announced by the Securities and Exchange Commission (SEC), the apex capital market regulator in Nigeria.
“With a nine months extension reached by the board of the SEC at its end of the year meeting, it is believed that capital market operators will have ample time to prepare in order to meet the deadline for compliance considering the global economic situation of which Nigeria is not an exception.”
He said the implementation of the 10 years capital market master plan, starting from 2015 will also be another key step that will shape market structure as the market is expected to witness the introduction of Islamic bond capital market products like Sukuk which is expected to contribute 15 per cent of the projected 25 per cent non-interest capital market contribution.
As the global economic downturn which rubs-off on the capital market prevails due to the dwindling oil price/revenue, it is believed that some investors would be discouraged from participating actively in such a way that would spur the market to positivity.
However, year 2015 holds key market expectations which include but not limited to the launch of the listing on the premium board of the exchange and the implementation of the ten-year capital market master plan (20152025), the full implementation of the recapitalisation of capital market operators with new deadline set for 30th September, 2015.
Some of the experts believed that the first quarter of the year may end on a negative note due to uncertainty surrounding upcoming general election.
Speaking with Daily Trust, Managing Director and Chief Executive Officer of Express Discount Asset Management Limited, Atiku Kafaru, he said there is good posture for the market in 2015.
He said the market in 2015 looks very dicey as factors militating against the market now will likely remain in 2015 as oil price remains low.
He said that the lack of positive economic numbers as the general elections draw nearer has continued to give in to sales pressure as many players exit the market to hold cash even at the wrong time.
He pointed out: “The recent austerity is just a sign of what should be expected in 2015 as the nation’s major export product has lost value in price which is likely to keep our reserve down even after the election. But all hope is not lost as foreign investors are sitting on the fence now waiting for the outcome of the elections to jump back into the market as devaluation has made our market more attractive to them because with small dollar they will continue to control the market transaction.”
A stockbroker trading with Calyex Securities Limited, Tunde Oyediran, said the stock market direction tends to be positive. The fears we are experiencing now would have been allayed.
“There is an empirical evidence that suggests that the year following devaluation of a country’s currency would experience upswing in their capital market. The banking sector, which has been battered, will lead the recovery. They often give over 8 per cent dividend yield hence they will attract more patronage in the first quarter.
“There is need for strong Nigerian investors’ participation in the Nigerian stock market to enhance stability and development of the economy.”
He said that capital market operators should ensure development of domestic investors’ confidence in stocks, saying that is critical for long-term stability. He said that Nigerian investors are the ones that have a long-term stake in the economy and, therefore, they should be encouraged at all times.