Stories By Chinenye Anuforo
Despite the prolonged lull and losses experienced in the nation’s capital market in 2016, financial experts have predicted that the market might experience some rebound in 2017, if the Federal Government authorities would come out with appropriate policies to drive the growth of the general economy, capital market inclusive.
Specifically, Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, argued that recovery in the capital market can only be seen when there is a macroeconomic recovery.
He said, “the recovery in the market we are going to see will depend on how quickly the economy goes into rebound. We have seen a worsening of the contraction in the economy. One is hoping that if the government can carve out accurate policies, we should begin to see a recovery some time in 2017. It is only when we see a macroeconomic recovery that one can be sure of a sustained recovery in the equities market. So, I think the recovery of the capital market will be tied to the general economy.”
Dr. Glenn Prince-Abbi, the Chief Executive Officer, Espera Global Corporation, in an interview with News Agency of Nigeria recently also expressed optimism that the Nigerian capital market and the economy would experience increased activities with innovative macroeconomic policy in 2017.
Prince-Abbi said innovative macroeconomic policymaking with strong strategic insight would provide the platform and delivery system to improve economic activities, including the capital market.
He expressed optimism that there would be improvement at the Federal Government level in 2017, going by the various fiscal policy measures being articulated to stimulate the economy.
He also stated that Nigeria’s foreign reserves would likely improve in 2017 with sustained stability in crude oil production output and through a progressively diversified export revenue structure.
“Along with this, real sector performance will improve, productivity growth will register and the GDP growth will rise,” he stated.
Prince-Abbi observed that the Federal Government’s planned investments in infrastructure would further stimulate this process and open up relatively new growth pathways.
“The economic contraction we have currently will gradually reverse and the capital market itself will therefore fare better,” he stated.
On how to sustain the capital market, he urged the operators and investors to look more at the medium and long-term investment windows rather than being caught by the syndrome of short-term speculative actions.
He explained that short-term speculative actions could harm the market and do nobody any good.
“Smart investment in all climes and times requires strategic thinking; it requires long views and wider planning horizons. This is the sophistication that investors, local and foreign, must bring to the market.
“I propose strongly that operators, regulators and all stakeholders must work together to build and raise the sophistication of the second largest capital market in Africa. The recent interface with the London Stock Exchange and all the expressed intentions of synergy and integration are good signs.
“Well-developed and sophisticated capital markets can generate an infinite mix of economic benefits, spanning job creation, productivity growth and improved macroeconomic stability.
“This is what we need at this stage in Nigeria’s economic situation and this is what we need to take firm and measured steps in 2017,” Prince-Abbi said.
According to him, events in the last couple of weeks show substantial improvements to make one anticipate brighter prospects in the market.
The economic expert said the market downturn was due to the low crude oil price, as a principal factor in 2015 that affected Nigeria’s foreign reserves, adding that it also gave the naira a battering among international currencies in 2016.
He added that the anti-corruption war and the Niger Delta militants’ destruction of crude oil pipelines contributed to the development in the market. The financial expert explained that these incidents created a massive shortfall in the country’s planned crude oil production output and export earnings and a fall in the nation’s currency.
Guinness Nigeria announces EGM to approve N 40bn Rights Issue
Guinness Nigeria Plc has announced its intention to hold an Extraordinary General Meeting (EGM) of its shareholders to approve resolutions for a rights issue.
The EGM is scheduled for January 24, 2017 in Lagos.
According to a statement from the company, Guinness believes the rights issue will allow the it to optimize its balance sheet improving its financial and operational flexibility.
“If approved at the EGM, full details of the rights issue which is expected to raise up to N40 billion if fully subscribed, will be issued prior to the launch. The rights issue is subject to the approval of the relevant regulatory authorities”, it stated.
Guinness Nigeria was established in 1950 and listed on The Nigerian Stock Exchange in 1965. With a shareholder base of over 75,000 shareholders, it is also one of the foremost quoted companies in Nigeria.
The company built its first brewery in Ikeja in 1962, and currently has facilities in Ogba, Benin City and Aba. Included in its portfolio are such acclaimed brands – Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Harp Lager beer, Smirnoff Ice, Satzenbrau Pilsner, Dubic Lager Beer, Harp Lime and Malta Guinness Low Sugar. Guinness Nigeria is a subsidiary of Diageo Plc, a global leader in beverage alcohol with an outstanding collection of brands across spirits, beer and wine categories.
FMDQ admits Vetiva S&P ETF on its platform
As the financial markets wrap up activities of last year, FMDQ OTC Securities Exchange, on December 29, 2016, admitted the pioneer listing of an Exchange Traded Fund – 10,000,000 Units of the Vetiva S&P Nigerian Sovereign Bond Exchange Traded Fund (“VS&P ETF”) – on its platform.
With the due approval of the FMDQ Board Listings, Markets and Technology Committee, the VS&P ETF, becomes the second Fund to be listed on the OTC Exchange, following the Greenwich Plus Money Market Fund.
FMDQ remains unyielding in its mandate to revolutionise and promote the development of the Nigerian financial markets.
The OTC Exchange is strategically positioned to boost the development and competitiveness of the markets under its purview.
In the fixed income market, specifically, FMDQ provides a most reliable platform for the registration, listing, trading and valuation of debt securities.
The VS&P ETF, will, as part of the benefits for securities listed on FMDQ’s platform, be availed global visibility through the OTC Exchange’s corporate website and the FMDQ-Bloomberg E-Bond Trading System. The listing of the VS&P ETF will serve to drive increased confidence in the possibility of the nation’s investment climate, and the Fund will undoubtedly enjoy the prestige provided by FMDQ’s listings and quotations service.
Looking ahead into 2017, FMDQ will remain committed to impeccable delivery of its mandate, leveraging on, as it must to ensure success, the concerted and collaborative efforts of its stakeholders, to support economic development pertinent to the resuscitation, where applicable, and growth of the Nigerian financial markets.
Investors urged to explore opportunities in capital market, diversify risk
Stakeholders have called on investors to exploit the opportunities inherent in the nation’s capital market as a way of further boosting the fortunes of the country’s economy even as they also urged them to diversify their portfolio in order to mitigate risk.
The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, advised investors to exploit the emerging opportunities in Nigerian stocks at the moment to invest in the capital market.
According to him, “this is the best time to invest in the Nigerian capital market. Investment in the Capital Market is long term and it is one which requires attention and the support of parties concerned, to grow.”
He further dispelled the negative notion of continuous instability in the market. He stated that, “investors should know that the capital market is a cyclical market with up and down movements. The market is full of risks. I encourage investors to seek professional advice from investment specialists and stockbrokers that will be able to manage their investments in the market.
“Also, investors can personally manage and monitor their investment portfolios in a manner that will reduce risk and improve returns. Investors have to adopt appropriate techniques in making investment decisions because the capital market is not for gamblers, it is not a game of chance but a game that requires informed decision.”
Although the NSE boss was not specific on when the seeming lull in the capital market will subside, he, however, gave assurances that with the ongoing reform and support of all stakeholders, confidence is gradually returning to the market.
On his part, the Chief Executive Officer, Cowry Asset Limited, Johnson Chukwu, also called for investment in capital market just as he advised investors that in order to cushion their loss, they should diversify their investment.
He said, “my advice to investors is to shift their investment portfolios away from equities to instrument that have more stable returns and those are the fixed income instruments.
“There are bonds trading on the market so I think investors need to move away more from the equities to the fixed income market at this point in time. If you buy into bonds, you can get reasonable return at the current yield level instead of staying away from the market completely.”
The Chief Executive Officer of Stanbic IBTC Asset Management Limited, Bunmi Dayo-Olagunju, had earlier called on investors to take advantage of mutual funds to hedge their risks and boost their investments.
Dayo-Olagunju explained that considering the volatility in the equities and commodity markets, it is imperative for investors to diversify their portfolios by investing in mutual funds and other asset classes.
According to her, the attractiveness of mutual funds or collective schemes is the number of advantages it offers over other investment classes such as flexibility, which makes it possible to either invest a ‘lump sum’ or make regular instalments on a monthly basis, which means the funds can be accessed at any time by the investor who may require money for a variety of purposes such as healthcare, education, vacation and housing. Other benefits of mutual funds include steady returns, professional management and risk reduction, among others.