Capital market: Operators and investors rates Buhari high
President Muhammadu Buhari came into power on May 29, 2015, riding on the back of several campaign promises which included a war on corruption, improved social welfare, and the strengthening of the naira until it is equal to the dollar.
His victory came at a time the capital market was struggling to gain ground among its peers on the global stage following the boom and bust of the sector in 2008 during which most investors’ fortunes sank deeply. This in return eroded confidence of investors and deprived the Nigerian Stock Exchange (NSE) of the much-needed recovery from recession.
Three years down the line, the sector has garnered momentum and is improving so much that as at December 2017, the market capitalisation closed at ₦14.244 trillion, first time in three years. This feat was recognised by S&P Dow Jones in its Indices’ report, listing the NSE as one of the best five stock exchanges globally.
“The value of public companies on global stock markets grew by $12.4 trillion in 2017, according to S&P Dow Jones Indices, which included dividends in its calculation. The Nigerian All-Share index (ASI) is still miles below record highs set in early 2008, but a 43 per cent rally in 2017 has helped to close the gap.
“The index suffered mightily in 2015 and 2016 as low oil prices, militant attacks, currency troubles, elections and Ebola hit investor sentiment.” The report said.
According to Founder and Chief Executive Officer, Silk Invest, Zin Bekkali “oil prices have moved higher, the central bank has made it easier to swap currencies and the economy has snapped out of recession and If you look at where we stand today, the Nigerian market is still one of the cheapest markets on the planet.”
The Buhari-led administration also saw the ushering in of the Federal Government of Nigeria (FGN) savings bond, Green bonds Eurobond and most notably the soon-to-commence initial public offering (IPO) of MTN Nigeria in the market. In his democracy speech, the president revealed that in 2016, the government executed an expansionary budget and developed the Strategic Implementation Plan (SIP).
“For the first time, 30 per cent of the budget was earmarked for capital expenditure which represents an upward review when compared with the 2015 budget. “Our foreign reserve has improved significantly to $47.5 billion USD as of May, 2018 as against $29.6 billion in 2015. The inflationary rate has consistently declined every month since January, 2017.” He said.
Operators have since lauded the efforts of the president in the capital market, adding that the administration should not rest on its oars but do more to ensure the market develops to be a world class market.
Speaking to correspondent, Chief Executive Officer, Crane Securities, Mike Eze, said that the Buhari administration has done well in the last three years, adding that investors’ confidence in the market is high due to the enabling environment provided by the government.
“The government has tried in its little way and even the Vice President, Prof Osinbajo, was in the market to flag off the FGN bond in 2016. This shows that they had concerns about the capital market and if you observe the market at beginning of this year from January to February, there was a bull run and this happened under his tenure. By and large, the market has fared fairly well”
“This is because foreign investors are now finding the market interesting because of the enabling environment provided by the government”
He further said, “The government needs to do better in the area of providing more of the enabling environment it has provided in 3 years to ensure the market gets better and show more concern in capital market issues because the capital market is the engine room of any economic system and it is also a barometer used in measuring the economic template in the system. You find out that when the market does not do well, inflation rate becomes high but when it does well, the inflation rate reduces.”
For his part, CEO, APT Securities and Funds Limited, Garba Kurfi, said that the buhari-led administration has succeeded in doing what past regimes could not do. “The gains recorded in 2017 erased the losses recorded in 2015 and 2016 and also all other regimes could not succeed in pushing MTN to come and list on the NSE, other than his. Now MTN is going to be listed, that for me, it is a plus in view that what we gained in 2017, we have not experienced that in any other regime. The government recognized that our market could not continue with local players as foreign investors were needed, they worked on policies. With that singular act, our foreign reserve has improved and there is stability in the foreign exchange market. The I and E FX window also was one of the policies that helped foreign investors come in and out, hence this pushed the foreign investors into the capital market.”
“However we need more. It was just a single policy in Ghana that made MTN to list on Ghana Stock Exchange (GSE). If it were in Nigeria, Nigeria would have given 4G at no cost. Now 5G, if we did not do it for 4G, let us do a policy around 5G. The Discos and Gencos has been existing for many years and no one has compelled them to list, something needs to be done about that and there is also need for privatization of these companies as this will improve the market over-time.” He said.
On his part, CEO, Cowry Asset Management Limited, Johnson Chukwu, said: “The Nigerian capital market recorded a cumulative growth of 18.77 per cent in the all-share index in the first three years of President Buhari’s government. The first two years of the current administration saw the NSE losing 17.36 in 2015 and 6.17 per cent in 2016. The losses were however more than offset by a gain of 42.3 per cent in 2017.
“The reversal of fortune in 2017 could be attributed to reforms in the foreign exchange market by the Central Bank through the introduction of the Investors & Exporters window. This initiative engendered confidence among foreign portfolio investors and spurred their return into the Nigerian securities markets. Other factors that may have contributed to the gain in 2017 was the exposure draft of PENCOM on introduction of the multi-fund structure, which led PFA into taking measures to increase their investment in variable income instruments, in line with the requirements the guidelines.”
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