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Lack of trading at NSE branches worries Onyema

By on November 8, 2015

The Chief Executive of the Nigerian Stock Exchange, Mr. Oscar Onyema, has said the unwillingness of stockbrokers to carry out trading activities from branches of the Exchange is affecting the performance of the stock market.

Onyema stated this on Thursday in Abuja at the zonal Annual General Meeting of the Kano/Kaduna branch of the NSE.

He said the development had become worrisome as evidence had shown that despite the fact that some firms had resident stockbrokers in some of the offices, they were not allowed to trade.

The implication of this, according to him, is that a large portion of the investors’ funds raised from outside Lagos is transferred to the head office trading book, thus making the branch trading floors to be inactive.

Onyema stated, “It has become more worrisome when we have evidence that some stockbrokers have resident stockbrokers in some of these offices, yet are not allowed to trade. As a result, a large portion of the investors’ funds realised from outside Lagos are transferred to the head office trading book.

“While we agree that the funds were still deployed to stock trading, the reality is that branch offices’ trading floors are not active, while maintenance fees are incurred daily.”

He said the NSE was taking steps to make the branches more attractive, adding that plans had been concluded to relocate the branches in obscured locations to better areas.

For instance, Onyema said the Port Harcourt branch would be relocated before the end of this year, adding that Kano branch would follow by next year.

In the area of performance, he said the Kano/Kaduna branch of the NSE was being affected by the lull in the economy.

He said, “The branch performed very well with regards to trading. However, the quantum of trading was much lower than 2013; and as you know, 2014 was a difficult year, especially towards the end of the year when we had oil shocks.

“The year 2014 was a tough year and 2015 seems to be a tougher year, not only for the Exchange, but for the economy; and this is why we have some what we have in the report and we hope that as things turn around, we will improve.

“The northern part of the country has been challenged with security; and so, we could not do enough financial literacy that we ought to there.”

Onyema also said the volatility in the stock market had impacted negatively on investor confidence.

He explained, “We believe investors should periodically review their portfolios to make sure they meet their objectives, and if need be, rebalance their portfolios. They should also meet professionals that understand how portfolio management works.

“It’s important for the investors to understand that just because the market is going down, there are no opportunities. Investor confidence is very low given the market volatility that we have seen and the downturn in the All Share Index.”

According to him, the stock market is a reflection of the economy, adding that except the economy performed well, the stock market indicators would not experience a decline.

 

[Punch]