Capital Market operators blame CBN over market downturn

Some capital market operators on Monday blamed the Central Bank of Nigeria (CBN) for the sustained price depreciation of listed equities at the nation’s bourse.

Some of the operators, who spoke with the News Agency of Nigeria (NAN) in separate interviews in Lagos, said that the CBN’s tight monetary policies impacted the market negatively.

They said that the investing public was seriously concerned over the liquidity squeeze foisted on the market by the bank’s policies.

Mr Emeka Madubuike, President, Association of Stockbroking Houses of Nigeria (ASHON), said that the association was not happy with the current market trend.

Madubuike said that the CBN’s proposed increase of Cash Reserve Requirement (CRR) on the public sector to 100 per cent had created fear among operators.

He said that the development had created market instability and equity sell pressure.

Madubuike, who is also the Managing Director of Compass Securities and Investment Ltd., said that the U.S. quantitative tapering contributed to the market’s instability with the exit of foreign investors.

He said that the rapid exit of foreign investors and the attendant capital flight had made it imperative for active participation of more domestic investors’ in the market.

According to him, the association will continue to map out strategies, aimed at increasing local participation and enhanced market stability.

Also speaking, Mr Sehinde Adenagbe, the Managing Director, Standard Union Securities Ltd., said that the market value creation was not encouraging.

Adenagbe also attributed the downward trend in the market to CBN’s issues bordering on CRR and developments at the international financial industry.

He said that banks were exiting the market in preparation for the CBN’s recent pronouncement on CRR.

Adenagbe added that scarcity of funds in the economy contributed to the development in the capital market.

He expressed his optimism that the market would likely rebound in the next couple of days.

Mr David Adonri, the Chief Executive Office of Lambeth Trust & Investment, said that tight monetary policy would continue to slow down the equities market.

Adonri said that market regulators and operators needed to work together to enhance market liquidity and stability.

NAN reports that the All-Share Index last week dropped by 4.92 per cent or 2006.21 points to close at 38,767.29 points against 40,773.50 points achieved in the previous week.

Similarly, market capitalisation lost N643 billion or 4.92 per cent to close at N12.427 trillion, compared with N13.070 trillion posted in the comparative period.

Pfizer Products topped the losers’ chart, shedding 64k to close at N1.74 per share.

National Sports Lottery trailed with 11k to close at 51k, while Oando declined by N3.63 to close at N18.20 per share.

Conversely, 7UP Bottling Company led the gainers’ table, growing by N11.24 to close at N82.64 per share.

Julius Berger followed with N4 to close at N75, while Port Land Paints and Products gained 26k to close at N5.51 per share.

Overall, investors traded 1.92 billion shares worth N25.13 billion in 25,346 deals last week, compared with 1.59 billion shares, valued at N23.08 billion in 26,257 deals in the previous week.

The financial services sector led the activity chart with 1.47 billion shares worth N12.93 billion traded in 13,693 deals. (NAN)