Retail Investors Flee As Stock Market Plummets Beyond 20,000 Threshhold

The Nigerian Stock Exchange has fallen below the 20,000 threshold today, signaling gross market pessimism and general market avoidance by the retail investing public.

Many Nigerians are not willing to return to the stock market after the crash of 2008 that led to the erosion of several trillion Naira worth of shareholder wealth.

Adding insult to injury is the fact that the market crash was predominantly caused by the greed of financial and political leaders that ran the market into the dumps due to crass greed, and myopia.

Despite the fact that many of the mega debtors were named and shamed by the Central Bank of Nigeria, and the bank captains responsible for the rot were or are being  prosecuted, investor confidence is not yet ready to return to the markets.

Sure there may be depositor confidence witnessed by the fact that there hasn’t been any run on any of the nationalized banks, however the general public deems it better off to avoid the market like a plague.

Most of the assets on the Nigerian Stock Exchange are now held by foreign money managers who are in a prime position to profit from the market when it will inevitably rally.

Economics theory of the business cycle states that there will be periods of boom, followed by periods of bust. The market is definitely bust right now, and the trillion Naira question becomes when will it boom again?

Certain contemporary federal government policies can never sustain a boom, for instance the fuel subsidy removal plan will further cut back the purchasing power of Nigerians and reduce the disposable income available to make investments on the stock market.

Also the management of the Nigerian Stock Exchange must create innovative public enlightenment campaigns in order to draw the retail investors (mass population) back to the stock market in order for the current fortunes of the Exchange to be reversed.

Truth be told, the average Nigerian investor of the boom market of old did not have any fundamental or technical reasons for investing, and the market only saw his/her investments due to clever advertising campaigns launched by the banking sector during the era of the Charles Soludo led banking reforms.

There needs to be a deep re-orientation and indeed a healing process, because many Nigerians lost their savings, their dreams and even their health following the pipe dreams they were sold about the market in hither years.