Stock Market to Experience Upturn in Fortunes on Regulators’ Market Making Initiatives
Nigerian capital market regulators are strategically positioning the equity markets to become more efficient and profitable for investors by introducing rules and guidelines that encourage market making, short selling and securities lending.
Basically the activities of the market makers, securities lenders and short sellers will be to increase liquidity as investors try to take calculated risks in the quest to boost profitability.
Foreign investments into the stock market will also be on the uptick as one of the biggest hindrances to investing in Nigeria has been availability of adequate stock with which to make trade and investment.
Traditionally, in Nigeria huge blocs or volumes of equity shares are held by few individuals, families or corporations. The regulators are encouraging these individuals to loan their shares for an interest to speculators who then speculate with them.
This practice will undoubtedly invite into the market, more participants anxious to make money.
The new initiatives may take the market closer to Oscar Onyeama’s prediction that the market will reach $1 trillion by 2016. Although a figure more southwards may be a bit more realistic. The fact is activity will soar in the market because the securities lending spigots will open and gush. The ripple effect will be seen in market breadth.
Currently market performance is 18.51% year-to-date.