Stock Market Scandal Exposes Us To Foreign Investors’ Mockery, Say Operators

Oteh-1THE public hearing by the House of Representatives Committee on Capital Market, to identify the causes of the stock market near collapse, has assumed the topic of the day among capital market operators in Lagos.

The Director-General of the Securities and Exchange Commission (SEC), Ms Aruma Oteh, has queried the integrity of both the panel and its chairman, Mr. Herman Hembe, whom she alleged requested for N44 million to finance the probe.

The SEC boss told the panel that the first request from Hembe was for N39 million while the second request, which she alleged was made barely a week to the commencement of the public hearing, was for N5 million.

According to Oteh, all the requests were turned down, a reason, which she claimed, was responsible for the committee’s hostile attitude towards her.

However, stockbrokers, who commented on the implications the revelations, particularly on its likely effect on the market, expressed divergent views.

Mr. Godwin Ashikordi, CEO, Artmark Global Resources (a stock and oil/gas finance firm), said the revelations had dented the reputation of the chairman of the probe committee even though the allegations had not been investigated and proven.

He said when the probe started, everyone thought a messiah had come to right the wrongs that took place in the market, but the revelations cast doubts in the minds of the public that the usual Nigerian factor might have crept into the exercise and as such, nothing positive would come out of it.

“The public hearing ought to create the needed confidence that is now lacking in the market,” he said. “Capital market, the world over, thrives on investors’ confidence. Confidence can come about from the government, the market operators and the media.

“The House of Representatives Committee probing the market is an arm of government and it ought to handle the public hearing in a manner that conjures integrity and confidence.

“What is happening looks as if the committee is set out to witch-hunt and humiliate the regulators, many of whom were not around in the market when the market failure that warranted the probe took place.

“Potential foreign investors, who read about what is happening in the public hearing, will just be laughing at us and calling us unserious people. It is a sad development that deserves condemnation.”

Another stockbroker, Philip Olise, explained that the probe and the SEC DG’s revelations would not affect the market in any way.

According to him, previous similar probes on the market and other sectors oaf the economy had not yielded any fruitful results and this current one would record any difference.

“The noise about it will only be on the pages of the newspapers and will also end there,” he said. “As soon as the probe comes to an end, that would put a stop to the matter and no one will hear anything about it again.

“So, the market will remain where it is because those who are supposed to do something to move it forward are not keen on doing so.”

Olise asked rather furiously: “If the probe committee was determined to tackle the problems in the market and restore investor’s confidence, why did it go about soliciting money from the regulators, who have been accused of negligence?

However, “the SEC DG’s revelations came rather too late. Why did the woman not raise alarm at the time the probe committee chairman demanded the money?

“It is only a revolution that will save this country. The corruption in high places is killing the country and except there is a total cleanup of this mess, we would not move forward.”

Mr. Sola Oni, former spokesperson, Nigerian Stock Exchange and MD/CEO, Sofunix Investment and Communications Limited, sees a bright future for the market based on well-coordinated policies.

In a telephone interview, he said: “Unless a company operates optimally, its capacity to reward investors is impaired. The investor’s last option is to look for other asset classes if he continues to count losses.

“There are few cases where internal problems may hamper corporate performance but the usual challenge is the lull in the economy and uncoordinated policies between the money market and capital market.

“If these and other sundry technical issues are addressed with civilian precision, the market would at least advance a bit from its stagnant position.”

However, the stock market last week, maintained its up and down movement, of several week now. The All-Share Index went down by 125.77 points or 0.6 per cent to close on Friday at 20,824.25 while the market capitalisation decreased to N6.572 trillion.

Also, the NSE-30 depreciated by 8.33 points or 0.8 per cent to close at 946.60. In the preceding week, the All-Share Index and NSE-30 went up by 1.7 per cent and 1.9 per cent, respectively.

Two of the four sectorial indices appreciated during the week, same as in the preceding week.

Consumer goods appreciated by 6.08 points or 0.4 per cent to close at 1,718.03 and oil/gas appreciated by 0.22 points or 0.1 per cent to close at 216.31.

However, banking went down by 9.95 points or 3.3 per cent to close at 290.60 and insurance dipped by 2.33 points or 1.9 per cent to close at121.46.