Hi
I am talkin bout the report mentioned in the enclosed news clip
Renaissance Capital, JP Morgan give stock market clean bill
06 July, 2008 02:00:00 ABDUL IMOYO
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L-R: Imo Itsueli, immediate past president, Lagos Business School Alumni Association (LBSAA); Christopher Kolade, former Nigeria’s high commissioner to the United Kingdom, and Juan Elegido, dean, Lagos Business School, at LBSAA’s dinner in Lagos, weekend.
CBN, NSE, SEC, banks evolve rebound strategies
A report prepared by two reputed financial institutions has indicated that the Nigerian stock market continues to have short and long term opportunities, stating that the recent decline in the market was only a blip and that the growth projection is getting back on track. The report was put together by Renaissance Capital and J.P Morgan, and analysts said at the weekend it would calm investors’ nerves.
The report formed the plank of a four-hour meeting of stakeholders involving chief executives of regulatory agencies in the money and capital markets with managing directors of the nation’s 24 banks. A source told Business Day the report was a sweet balm to the nerves of investors and stakeholders who were before now worried stiff by developments in the capital market.
Business Day gathered that the parley deliberated on what was seen as the real cause of the problem in the capital market recently and observed that three key issues must have been responsible.
Firstly, it was observed that investors must have been confused about initial government’s inability to provide a clear signal as to what its policy direction looks like. Specifically, there were fears that the government may not be able to carry out its reforms both in the financial markets and the economy, hence, people were not sure of the government.
Secondly, the general feeling was that Nigerians, especially the investing public, had developed the impression that recent growth recorded in the market cannot be sustained based on reports by analysts who did not have the parameters.
This was also reinforced by the House of Representatives probe of the Nigerian capital market with the title: "Unethical and Fraudulent Practices in The Financial System". This, a source at the meeting disclosed, cast the reputation of the banks in bad light and since the banks constitute about 70 percent of the market, investors were beginning to lose confidence in the system.
The meeting which was held at the Civic Centre in Victoria Island, Lagos was attended by the minister of state for finance, Remi Babalola, Central Bank of Nigeria (CBN) governor, Chukwuma Soludo, chairman of Securities and Exchange Commission (SEC), Udoma Udo Udoma and the president of council of the Nigerian Stock Exchange (NSE), Oba Otudeko. Others are the director general of the SEC, Musa al Faki, his NSE counterpart, Ndi Okereke- Onyiuke, chief executives of the 24 banks in the country as well as representatives of Renaissance Capital and J.P Morgan.
However, as part of measures to safeguard the market and the economy as a whole, all regulators and key stakeholders agreed at the meeting to close ranks with a view to ensure that analyses that are unfounded are erased from the system.
Besides, the meeting agreed to adopt a report which indicated that only 12 percent of funds in the capital market are from outside the country while the remaining 88 percent are local. This goes to show that even when people move money from the capital market either to the money market or other areas of investment, it is still within the economy and would not have a ripple effect on the economy.
According to the source, "majority of the remaining 88 percent of Nigerians are unable to invest outside the country because they did not have the volume while others are scared because they have skeletons in their cupboards".
However, key stakeholders who were present at the meeting were optimistic that the simple correction that has been witnessed in the market would lead to a rebound.
There was also a general optimism that President Umaru Yar’Dua remained mindful that investors are watchful of his economic policy direction and would ensure that the economy is placed on a strong pedestal.
Speaking to journalists after the meeting, Babalola noted that the Nigerian capital market would continue to grow alongside the overall economy.
"It is clear that the market is still very robust, it is on the upswing and there is enough liquidity to boost the market. The macro economic performance direction is very robust, strong and positive," he said.
In the same vein, Soludo observed that the Nigerian capital market has immense potentials for future growth adding that the meeting was held with the Bankers’ Committee because the banks are the major players in the market.
He noted that all the key operators of the economy would collaborate and take proactive steps to protect the growth that the market had recorded in recent years.
He said: "It should be noted that it is normal for markets to go up and down and that is the nature of every market. However, we are ready to take all necessary procedures to ensure that the market does not crash. The various institutions
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