Liquidity: experts urge SEC, NSE to woo more local investors with tax incentives
Some capital market analysts on Monday urged the regulators to introduce more incentives that would encourage more local investors’ participation in the nation’s bourse to stem market volatility.
They told the News Agency of Nigeria (NAN) in Lagos that the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) that the incentives would make the bourse more active.
Prof. of Economics, Sheriffdeen Tella, of Olabisi Onabanjo University Ago-Iwoye, Ogun said that more multinationals should be encouraged to participate through tax incentives.
Tella said that corporate investors, especially those in the telecommunication and hospitality subsectors, would minimise the ripple effects of foreign inflow.
“This has a way of deepening the market, building confidence and making the market more active,’’ he said.
Tella noted that the often bearish trend of the bourse was occasioned by withdrawal of funds by foreign sources.
“This is so because foreign investors react easily to world prices and therefore withdraw or inject funds at will,’’ he said.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., Lagos said that the recovery witnessed in the market last week could be sustained if more local investors were wooed into the market.
Omordion urged local investors to take advantage of the low prices of stocks presently with strong fundamentals in order to reap medium-to-long-term benefits.
He said that investors should allow numbers to guide their decisions, while taking a position in any stock, especially now that stock prices had remained low.
According to him, the huge decline in stocks from its January peak is due to investors’ movement of funds to safer haven over uncertainties arising from next year’s general elections.
He said that the short-term bullish transitions in a bearish market recorded recently would likely continue if there was no local or external shock.
“We advise investors to trade cautiously and target stocks with sound fundamentals because the persistent low liquidity in the market is a minus for the market at this time,’’ Omordion added.
Meanwhile, a turnover of 1.38 billion shares worth N15.15 billion exchanged in 13,478 deals were traded by investors last week.
This is in contrast to the 915.86 million shares valued at N9.84 billion transacted in 14,033 deals in the preceding week.
The Financial Services Industry sector led the week’s activity chart with 1.24 billion shares valued at N9.73 billion traded in 7,404 deals.
The sector contributed 89.62 per cent and 64.19 per cent to the total equity turnover volume and value respectively.
The Consumer Goods Industry followed by the trading of 62.51 million shares valued at N1.69 billion in 2,560 deals.
The third place was Oil and Gas Industry with a turnover of 26.34 million shares worth 2.45 billion in 1,213 deals.
NAN reports that the All Share Index rose by 384.71 points or 1.19 per cent to 32,841.69 from 32,456.98 achieved in the previous week.
Also, the market capitalisation, which opened at N11.849 trillion, inched by N140 billion to close at N11.989 trillion.
Prestige Assurance led the gainers’ table for the week by 12 per cent or 6k to close at 58k per share.
Axamansard Insurance followed with a gain of 10 per cent or 18k to close at N1.98, while the Initiates appreciated by 8.93 per cent or 5k to close at 61k per share.
Conversely, Cutix topped the losers’ chart by 42.82 per cent or N1.67 to close at N2.23 per share.
Niger Insurance trailed with a loss of 15.15 per cent or 5k to close at 28k, while Universal Insurance went down by 13.04 per cent or 3k to close at 20k per share. (NAN)