Stakeholders point way forward for capital market in 2021

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By Itohan Abara-Laserian

Lagos, Feb. 9, 2021 Participants at the annual economic review of the Chartered Institute of Stockbrokers (CIS) on Tuesday projected a positive outlook for the Nigerian capital market and the economy in 2021.

They also identified certain factors that must be addressed to achieve double digit in spite of the impacts of COVID-19 pandemic.

They made the projections at a webinar organised by the CIS themed: “The Nigerian Economic Review for 2020 and Outlook for 2021 With Recommendations”, in Lagos.

Presenting the CIS’s position paper, the Chairman, Research and Technical Committee, Mr Akeem Oyewale, said that economic outlook for 2021 was predicated on the timing and availability of vaccines to put covid-19 under control.

Oyewale said that the equity market must be supported, strengthened and stabilised with continuous liquidity.

“Private sector activity needs to be significantly stimulated, while the Micro Small and Medium Scale business class should have greater access to viable long-term capital.

“These will be effectively accomplished if the equity capital market is supported, strengthened and stabilised with continuous liquidity.

“Based on the universally acknowledged principle that the money (short term) and capital (long term) markets complement each other in the economic development process, we wish to call on the Central Bank of Nigeria (CBN) to support the equity arm of the Nigerian capital market.

“Creation of an intervention fund for securities dealing firms, to avail them the necessary liquidity to maintain consistent position on quoted securities, thus stabilising the market.

“Permit banks’ stocks to qualify for investment of margin lending facilities, under strict regulatory controls, because of its significant impact on market turnover.

“In view of the gradual return of local investors, we enjoin the CBN to be deliberate in dealing with interest rate, liquidity and yield adjustments in its monetary policy,” Oyewale said.

According to him, local pension funds served as the critical catalyst for stabilising and propelling growth in the advanced economies of the world.

He, therefore, urged the Pension Commission and Pension Fund Administrators (PFAs) to increase the percentage of pension funds invested in the Nigerian equity market.

“Investment of Nigerian pension funds in local equities remain less than 10 per cent of pension funds under management, but we strongly believe that, given the current needs and safety structures of the market, the 25 per cent statutory cap can be safely made a minimum figure for the PFAs.

“The impressive equity index performance aside, the massive 446 per cent oversubscription of the FGN’s third Sukuk Bond, issued to construct and rehabilitate as many as 44 major roads across the country, has further confirmed the strong absorptive capacity of the Nigerian capital market,” Oyewale added.

An economic consultant, Dr Biodun Adedipe of B. Adedipe and Associates, who spoke on “Global Economic Dynamics in 2021”, said that success of COVID-19 vaccine in the United States and China would have positive impacts on Nigeria but strongly advocated for investment in Agriculture, ICT and manufacturing as they have potentials to revive the economy.

Adedipe added that government should make credit available, accessible and attractive for investment.

Another economic consultant, Mrs Kemi Akinde, urged the Nigerian Stock Exchange to commence trading in derivatives without further delay to enable investors enjoy the opportunities for risk management.

Earlier in his welcome address, the CIS President/Chairman of the Council, Mr Olatunde Amolegbe, said that the council had approved the recommendation to review the nation’s economy annually.

He said: “Two years ago, the council of CIS approved a recommendation of the Research and Technical Committee, to carry out a thorough review of the Nigerian economy every year.

“With a view to helping government, policy makers and industry regulators in the country craft effective strategies to accelerate GDP growth in the country,” Amolegbe said.

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