2022: Capital market to sustain positive momentum in H1— Operators

Operators in the Nigerian Exchange Ltd., (NGX) have expressed optimism that the  capital market activities would maintain positive momentum,  the first half of 2022.

They said this in an interview  on Thursday in Lagos, while reacting to market expectations in 2022.

Mr Olatunde Amolegbe, President, Chartered Institute of Stockbrokers (CIS) said the positive movement would be maintained in the first half of 2022 on the back of some factors.

Amolegbe listed the factors as good corporate performance in the first quarter, the implementation of some part of the Petroleum Industry Act (PIA), expected to further raise government’s revenue.

He said  the market would likely respond positively to the implementation of some part of the PIA.

According to him, the intense focus on infrastructure development is  expected to spur both governmental and corporate capital raising,  which will lead to increased market activity.

”These will be hinged on stable macroeconomic policy, increased security  and stable polity.

”Two years of positive returns go to show that the market is reflecting its function as the barometer for the economy.

”The IMF had predicted a positive GDP growth for the country for 2021,  and the market had reflected this by closing at six per cent for the year. We also expect positive movement for the first half of 2022 on the back of a few factors,” he said.

Also speaking, Mr Eguarekhide Longe, the Chief Operating Officer, NASD, said that capital market operators (CMOs) in 2022 needed to look less to government as the beacon of economic progress.

Longe said CMOs should be more creative in order to provide real solutions that would compel economic growth.

In 2022, Capital Market operators needed to look less to government as the beacon of  economic progress as a people, and more to their creativity and imagination to provide real solutions that would  compel economic growth.

”2022 requires clear thinking champions dedicated to evolving and unlocking value from the ordinary day-to-day needs that continue to fester in our environment.

“It is in observing the individual personal struggles and crafting solutions to these that deep value creating opportunities will be born in our capital market,” he said.

Longe wondered why a company like  Innoson Vehicle Manufacturers (IVM) was not being courted by CMOs to be listed in the market.

He noted that the key driver of the capital market in 2021, as would be expected, remained the macro-economic environment as dictated primarily by monetary policy.

“Fiscal policy options were largely constrained by the restrictive monetary policy and exchange rate environments.

“Thus, with yields in the fixed income market commencing a steep upward trend from the end of February,  2021, the gains in the equities markets paled and began to become eroded, as investors switched to the preferred stability of guaranteed income returns.

“The long-awaited demutualisation of the Nigerian Stock Exchange was also a key driver of activities in the capital market.

“The debt capital market continues to be the segment of the capital market that is nearly most connected to the dynamics of the Nigerian economy.  A good number of capital issues from green bond instruments to sukuk offerings,  were successfully raised and issued via the FMDQ platform.

“There is an urgent need to entwine the capital market through all its segments; debt, equity, primary and secondary, into greater relevance to the Nigerian economy,” he said.

According to him, there are two challenges that need to be addressed in the Nigerian capital market; creating relevant content and identifying and building a database of investors to give effect to the content thus created.

“It did not take investors much convincing to buy into the MTNN offer for sale floated in November/December 2021.  MTNN is a story that the average Nigerian can relate to.  It touches the heart of retail Nigeria.

”Where are the agriculture propositions that can be floated on our capital markets that can effectively solve the scarcity of maize and soya beans which make the cost of poultry continue to escalate?

”Where are the financial advisers on our market who are asking the questions why can’t workers live in lower cost housing in Ibadan and commute efficiently daily,  to work in Lagos and return to Ibadan upon closing for the day.

”The government has established the asset; it should be the job of the private sector to optimally utilise it, he added.