‘Stock mar­ket sta­bil­ity key to at­tract­ing for­eign in­vestors’

The Punch - - CAPITAL MARKET - Dayo Ojerinde

APro­fes­sor of Eco­nom­ics at the Covenant Uni­ver­sity, Ota, Ogun State, Philip Alege, has said the level of sta­bil­ity of the stock mar­ket of any econ­omy plays a sig­nif­i­cant role in at­tract­ing for­eign in­vestors.

Alege, while de­liv­er­ing the 21st in­au­gu­ral lec­ture of the uni­ver­sity re­cently, also said the stock mar­ket was vi­tal to sus­tain­able equity fi­nanc­ing for wor­thy in­vest­ments and cap­i­tal for­mu­la­tion.

He said, “The more ed­u­cated the in­vestors are in the mar­ket, the more volatile is the mar­ket. The av­er­age ed­u­ca­tion level of in­vestors can thus be seen as a vi­tal non-macroe­co­nomic vari­able that in­flu­ences stock mar­ket price volatil­ity in Nige­ria.”

The don also urged Nige­ri­ans to con­sume prod­ucts pro­duced lo­cally to boost the coun­try’s for­eign ex­change.

“Con­sump­tion pat­tern among house­holds could also de­ter­mine the level of im­port of con­sum­ables and the vol­ume of ex­ports within the econ­omy at any given time. This equally has im­pli­ca­tions for the ex­change rate of the lo­cal cur­rency about its dol­lar equiv­a­lent.

“When most of the con­sum­ables are im­ported, and fewer prod­ucts are ex­ported, this could cre­ate a sig­nif­i­cant im­bal­ance in de­mand for for­eign ex­change re­sult­ing in a deficit of the bal­ance of pay­ment is­sues. In Nige­ria, there is more pref­er­ence for for­eign goods de­spite the ex­ces­sive cost as­so­ci­ated with the de­mand com­pared to in­dige­nous con­sum­ables,” Alege said.

The theme of the in­au­gu­ral lec­ture was, ‘Re­think­ing the method­olog­i­cal ap­proach to con­tem­po­rary macroe­co­nomic anal­y­sis in Nige­ria.’

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