Future of the Nigerian capital market after global economic meltdown will certainly form part of the discourse when the new Director General of Securities and Exchange Commission (SEC), Arunma Oteh, and other stakeholders of the market meet in Lagos this week.

The forum which will have media men in attendance offers the SEC DG, her counterpart at the Nigerian Stock Exchange (NSE), Prof. Ndi Okereke-Onyiuke, market operators, registrars and issuing houses, and other stakeholders opportunity to thinker on the way forward.

Interestingly, the meeting is coming on the heels of just concluded World Economic Forum Annual Meeting 2010 in Davos, Switzerland, where economic experts unanimously agreed that to improve the state of world after global meltdown governments and institutions must rethink, redesign, and rebuild.

Beside rethinking development, the focal point is where would big money managers invest? Stock markets are wobbly again. Global economic prospects are uncertain. And political climate of most emerging economies unpredictable. To domesticate these nagging issues, we may ask: Can foreign investors gamble their funds in our financial markets in spite current state of the economy?

Crash of Nigerian capital market which was attributed to massive funds outflow at the wake of the global financial crisis and the banking sector crisis have proved that our economy is not insular as it was wrongly thought; and for the economy to do well it must draw strength from foreign direct investments.
In view of the lack of full disclosure in the market, NSE status as private sector business (as opposed to a demutualised stock exchange) with all its imperfections, is the market the best place to invest among other emerging markets as alternative?

With what has happened to many investors as sad lesson, investment decision may not so much be because it delivers good returns, but because the market is stable and relatively easy to turn investments back into cash. To this extent, NSE may clearly be on the sidelines, if not on a blacklist of investment destinations.
“Investment heatmap” of fund managers do not favour economies full of uncertainties. Though they may look for “dislocated” troubled emerging markets where it is easy to exit but that would only add to the woes of investors when they dump their equities which is why some stock markets are rethinking how to curb activities of short term players otherwise called speculators in the market place.

Are the regulators, operators and other key stakeholders of the market rethinking, redesigning and working out any strategies of rebuilding Nigerian capital market to guarantee minimal risk of losses after market crash blamed on global financial meltdown (rightly or wrongly)? For a capital market that degenerated from yielding enviable returns to investors to delivering huge losses certainly there is need to take crucial steps to fix whatever identifiable problems holding it down. For stakeholders the most important challenge before the new DG is restoring investor confidence. They drew her attention to the factors that led to loss of confidence in the market.

According to the president, Progressive Shareholders’ Association of Nigeria, Mr. Boniface Okezie, if the new DG must restore investor confidence in the market, then she must be seen to be working towards protecting investors’ funds, and in doing this she has to revisit some of the outstanding issues that have weakened investors’ confidence in the market but which the Exchange has failed to address. For instance, cases of questionable reconstruction of shares by quoted companies.

Okezie who accused the trio of SEC, CBN and NSE of failure to protect investor’s funds recalled that shareholders of former African Continental Bank (ACB), one of the merged banks that came to be known as Spring Bank Plc, were short-changed by Spring Bank. According to him if new SEC DG begins by addressing some of the outstanding knotty issues that led to avoidable loss of funds by investors on the market, certainly such move will rekindle lost confidence and make investors to rush back to the market.

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The council of the Nigerian Stock Exchange (NSE) approved the delisting of 64 securities during the year ended December 2009. The Director General, The NSE, Prof. Ndi Okereke-Onyiuke, gave the revelation last week during the 2009 review of the capital market performance for the year 2009.

“The Council of the NSE approved the delisting of nine dormant companies following the expiration of time given the companies to regularise their status with the Exchange. The decision was effected on Wednesday, May 13, 2009,” she said.

According to Onyiuke, the companies affected by the delisting included; Ferdinand Oil Mills Plc; Footwear Accessories Manufacturing and Distribution Plc; BCN Plc; Chrislieb Plc; Epic Dynamics Plc; Liz Olofin and Company; Oluwa Glass Company Plc and Asaba Textile Mills Plc. Also delisted were; 53 fixed income securities on account of maturity including six FGN Development Stocks; Four State Government Bonds; 41 Industrial Loans and Two Preference Stocks.

Others removed from the Daily Official List of the NSE included; Universal Trust Bank Plc, following its acquisition by Union Bank of Nigeria Plc., Nigerian International Debt Fund Plc delisted from the equity section and granted Memorandum Listing status on December 15, 2009.
Onyiuke also said that the Nigerian Capital Market like every other market maintain cycles, adding that the bearish run noticed in the market for some times is part of the market cycle.

She said that the NSE sustained the cycle of boom for a period of 47 years, stressing that it was only in 2009 that cycle of doom started. She noted that the doom period has stopped because the year 2010 will bring the lost glory in the market.
According to her, investors should cash in on the low prices of stocks and take position in the stocks of their choice. She said that stocks have gone below their book value. However, she advised investors not to run amuck trying to borrowing money in order to invest in stocks. She noted that very soon foreign and local investors would start flooding the Exchange again chasing stock in readiness for the boom times.

“Despite price declines and the shunning of risky investments, foreign investors continued to demonstrate confidence in the Nigerian economy during the year. Following modest recoveries in their home markets, some of our erstwhile foreign investors returned while new ones sought opportunities considering the key attribute of high returns, liquidity and safety of investments,” she said.

Onyiuke observed that despite the global recession, the Nigerian capital market remained attractive to foreign investors and portfolio managers seeking cheap equities and high-yielding bonds. She added that interim statistics show purchases (inflow) by foreign investors during 2009 to be in excess of N214.741 billion, representing 31.32 per cent of the aggregate turnover which is an increase when compared with the N153.457 billion recorded in 2008. She said that currently, total sales (outflow) during the year were in excess N195.583 billion, culminating in a net inflow of N19.158 billion, a reversal of the net outflow of N480.5 billion in 2008.