Value of equities trading on the Nigeria Stock Exchange dipped by N2.2 trillion in January alone, heightening fears of an imminent crash.The crash scare is coming as stock analysts say the loss of 14 per cent of the market value last month was unprecedented and monumental. On Friday market capitalisation fell to N 4.8 trillion as against N6.957 trillion on January 2 when it opened for the year.
Managing Director of APT Stockbrokers Malam Kasimu Kurfi told Daily Trust by telephone at the weekend: “The market has already crashed. It’s now rebouncing. If you observe since last week the numbers of listed securities that are gaining have been on the increase. The market has reached the bottom. It is coming up. People are just selling because of panic. I can assure you it will bounce back.”
He added: “The government needs to intervene. Even with encouraging statement to encourage people. It is not a bailout of a sort that we need.”
He urged government to invest idle fund into the market, saying the percentage that can be invested from pension fund could be increased, stressing that the government holds the key to the future of the market.
The stock market lost over N3 trillion in 2008. It opened in January last year at N10.18 trillion market capitalisation and then peaked at N12.6 trillion on March 5 before the bears set in. The market closed for the year 2008 at N6.957 trillion. This is against the gain of over N6 trillion and a growth rate of 74.7 per cent in 2007.
Managing Director of Finmal Finance Services Limited Alhaji Umaru Kwairanga attributed the crisis to global economic meltdown that forced foreign investors to withdraw their investment from the market, saying the problem may linger for some time but expressed optimism that it would pick up.
He also said the present fall in the prices of crude oil in the international market was partly responsible as it may also affects government efforts at addressing the problem head on. He said the public need to know that the market is not a place for short term investors, regretting that the news filtering out of the market have been counterproductive.
The Federal Government had introduced some recovery measures in August last year to stem the persistent fall in the stock market. Five market makers were also appointed. Market makers are wholesale operators who ensure that there is liquidity in the market by either buying shares when there is a glut or selling shares when there is scarcity.
When contacted for comments yesterday, spokesman of the Nigerian Stock Exchange (NSE) Mr. Sola Oni said the market reflects what is happening in the larger economy.
He said the world over, governments have been bailing out their stock markets and companies. Oni called on Federal Government not to fold its arms as the problem was beyond the control of the NSE alone. He also said that the market has started picking up. Speaking about the inability of the five market makers, approved by the Securities and Exchange Commission (SEC), to start work, Oni said: “They have to pass certain criteria before they can start operation and one of them is that they have to have evidence of financial strength.”
Spokesman of the SEC Lanre Oloye did not answer calls made to him yesterday.