Capital market operators on Wednesday, January 27 called on the Federal Government to put a halt to the crash in the market which has caused a massive loss of N4 trillion in 25 months.
The Nigerian equities market has lost nearly one-fifth of its capitalization so far this year.
At a media briefing on the state of the capital market in Lagos, stakeholders under the auspices of the Chartered Institute of Stockbrokers (CIS), Association of Stockbroking Houses of Nigeria (ASHON) and Association of Issuing Houses of Nigeria (AIHN) said the Central Bank of Nigeria (CBN) should create a N200 billion intervention fund for market makers as a short-term measure to stave off the downward trend orchestrated by divesting foreign portfolio investors.
They also called on the government to step in to support the market at any time of steep decline by buying and warehousing shares as this is a common practice in advanced markets where government takes active interest in the performance of the capital market.
Market operators said government should use the platform of the Nigerian capital market for funding of its 2016 budget as well as continuing privatization of government agencies and corporations.
Stakeholders also called on Securities and Exchange Commission (SEC) to structure unclaimed dividends in a way that they could be reinvested in the capital market.
Market operators said government should take a bold long-term move of instituting a zero interest policy for banks in order to discourage recourse to short-term money market instruments and to encourage long-term savings and investments.
Acting president, Chartered Institute of Stockbrokers (CIS), Mr. Oluwaseyi Abe, noted that the Nigerian capital market has been going through challenges that are not uncommon with other markets especially the automated markets which operate in a crest and trough pattern in response to variables in the macro economy and within the market itself.
He pointed out that the current steep decline at the stock market is due to three main factors including adverse macro-economic environment largely due to the drastic drop in the price of crude oil, negative public sentiment which is related to the state of the macro-economy and the retreat of foreign portfolio investors which is related to CBN’s policy on foreign exchange.
President, Association of Stockbroking Houses of Nigeria (ASHON), Mr Emeka Madubuike, explained that the N200 billion intervention fund would provide liquidity to the market makers such that each market maker should be able to access between N1 billion and N10 billion in concessionary funding.
