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Stockbrokers task NSE on market depth

By on January 14, 2014

Stockbrokers in the nation’s capital market have appealed to the Nigerian Stock Exchange, NSE, to increase the depth of the market by further introducing more quality securities that will absorb the expected liquidity inflow in the course of the year.

They noted that certain positive developments in the international and domestic macro-economic environment would direct more investible funds to the private sector, which the equities market is expected to benefit from.
According to them, failure to expand the product base to give investors wide investment option could lead to an overheated market.

“Judging by the domestic macro-economic environment, if you look at the Federal Government’s budget for 2014, you see that the budget deficit has declined. The implication, therefore, is that the debt finance by Federal Government is definitely going to reduce. So that will make more money available to equities market and private sector. “A combination of more money going to the equity market and private sector will drive the private sector led economy, which the equities market will also benefit from.

There is also an indication that the interest rate will decline this year. If the interest rate declines in the fixed income or debt market, it means the equities market will be quite active,” said Mr. David Adonri, Managing Director/CEO, Lambeth Trust and Investment Company Ltd.

“Then looking at the international macro-economy, a lot of financial analysts believe that 2014 will usher in a complete recovery of the global macro-economy and when that happens and the global economy improves, it will facilitate growth in equities market globally. That, therefore, reinforces our expectation in domestic market that activities will center more on equities market,” he added.

Continuing, he said, “But that also comes with its own challenge for our market that lacks in depth. So, if we have high liquidity coming into the market, the challenge is to increase the absorptive capacity of the market. And we seriously hope that it will not drag the market into an overheated entity. That underscores the importance of deepening the market.”

Speaking in the same vein, Mr. Tola Odukoya, Vice-President, Dunn Loren Merrifield, said there is need to develop a strong buy-side in the market.
In his words, “We need to develop a strong buy-side (that is to have a stronger and wider investor-universe beyond pension funds and foreign investors.) Also, it would be good to attract strong non-listed companies to list on the NSE thereby increasing the securities available and expanding the market.”

 

 

 

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