By Helen Oji
Muda Yusuf, LCCI Boss.
Experts have stressed the need for government to pursue vigorously, policies that would attract investment in stock market, as well as stimulate growth and funding for SMEs to make them more sustainable for listing on the Exchange.
Besides, they also advocate for a review of the current Foreign Exchange (forex) policy to boost performance of listed firms.
The stakeholders, who spoke at the 7th yearly conference Investiture of Fellows and Induction of Associates of the Institute of Capital Market Registrars (ICMR) held in Lagos at the weekend, bemoaned the current state of the stock market.
Indeed, the capital market has witnessed unprecedented lull in the past few years, despite efforts made by the regulators to stem the persistent decline in share prices.
For instance, the market capitalisation, which opened the year at N9.850 trillion as at January 6, 20I6, dropped by N949 billion or 10.7 percent to close at N8.901 trillion as at yesterday.
They, however, argued that a well-articulated policy to fast-track growth of SMEs and subsequently listing them, with a relaxation of all forex restrictions would boost performance of listed firms, improve liquidity and deepen the market.
Specifically, the Director-General, Lagos Chamber of Commerce and Industry, Mudashiru Yusuf, explained that the development of the market is dependent on the performance of other sectors of the economy especially the manufacturing industry.
He pointed out that implementation of the right policies would attract investment in infrastructure while access to funding for such projects would be done through the capital market.
Furthermore, he argued that with the high-interest rate, speculators move their investment from the stock market to other asset classes, especially fixed income securities.
According to him, a lot should be done on the supply side of the market to increase participation in the equities.
“If people are making money in treasury bills, what business do they have with the equities market. They cannot access the market or go into production,” he added.
The Registrar Chief Executive, ICMR, Walker Ogogo, noted that the kind of policies expected to enhance capital market performance is foreign exchange related.
According to him, the market is dependent on the performance of key players, who are listed firms in the manufacturing sector.
He explained that if these companies are not able to produce due to some forex restrictions, there would be a multiplier effect on the entire economy.
“So what is needed to boost the market is foreign exchange related policies that would give manufacturers a sense of belonging so that they can produce a very low cost.
“Also, there should be encouragement for those who want to start their businesses, especially SMEs. If they will remain the way they are, some of them would die off and if this happens, the economy will suffer