Military v IPOB: Political Tension Takes Toll iOn Capital Market

Investors in cautious trading at NSE

Biafra protesters PHOTO:

Biafra protesters

FOLLOWING the palpable tension created by the clashes between the Nigerian Army and the Indigenous People of Biafra, (IPOB) particularly in Umuahia, Abia State and its fallout which continued to reverberate across the country, businesses are now at the receiving end of the tension.

In particular, the capital market, a critical arm of the financial industry negatively impacted by the growing tensions across the country.

For example, Equities’ trading resumed for the week on Monday, on negative note, following huge losses recorded last week,

Investors’ traded cautiously as political developments may not have signaled restoration of sanctity in the South East region.

As at mid-day on, the Nigerian Stock Exchange’s (NSE’s) All-Share index had (ASI) had lost -0.14 per cent, a development cross section of analysts said would reverse by mid-week.

However, the country’s charged political situation was attributed as the cause of heavy loss in the stock market performance indices last week which if not checked could further worsen trend this week.

Cross -section of stakeholders and stock brokers who spoke to The Daily Times said that the country has remained charged such that some investors started reconsidering their investment in the country as there were calls from across the globe for clarifications, just as some hurriedly dumped.

A stock broker, who spoke on condition of anonymity said the military and the pro- Biafra agitators in the South East of Nigeria, which threatened to spread to other parts of the country was of great concern to investors and the market which reacted accordingly.

“Investors became apprehensive and unsure of political direction of the country, this led to panic in the market as some withdrew their bids, while many offered theirs for sale”

The broker, who said that the Nigerian equities market has relatively done very well soon far this year, added that a soothing environment needed to be enhanced for sustenance of market growth and confidence, adding that investors are always cautious of developments that would negatively impact their investments.

The NSE’s All-Share Index and Market Capitalization depreciated by 2.65 per cent, and 2.63 per cent to close the week at 35,005.57 and N12.068 trillion respectively. The losses were the highest in a week year to date recorded by the equities market.

The week also witnessed losses in all market measuring sectoral indices.

However, the brokers lauded the Senate President Dr. Olusola Saraki, for dousing tension across the country, following his calls on the Federal Government to address the issue.

One of our correspondents gathered that the market was not only somewhat reawakened by the statement of the Senate President, “but also the government moves to resolve the crisis swifly.”

Meanwhile, the NSE has revealed that it has empowered over 25,000 capital market stakeholders in its efforts at making better investment decisions through investor clinics, which the local bourse organises on a regular basis.

The latest of such clinics, which shed light on the importance of dematerialisation as a necessity in the trading of shares, was concluded on Wednesday, September 12, 2017 at the Stock Exchange House, in Lagos; and was targeted at sensitizing the investing public and brokerage community of contemporary initiatives in the market, a statement from the NSE revealed.

Participants were also made to understand the advantages of direct cash settlement and e-dividend processing in the consolidation of returns on their equity investment, as well as the overall benefits to the Nigerian Capital Market.

The Executive Director, Market Operations and Technology, NSE, Mr. Ade Bajomo, was quoted as saying that, “in 2016 alone, we executed over 200 free capacity building workshops, aimed at enhancing investor understanding of the workings of the capital market.

The multiplier effect of these workshops is phenomenal, as over 25,000 participating investors have been equipped to make better investment decisions”.

The recently concluded event was organised to educate capital market stakeholders on ‘The role of Dematerialization, Direct Cash Settlement and E-dividend in the development of the Nigerian Capital Market’,
e-dividend in not only reducing the perennial issue of unclaimed dividend growth but in ensuring that investors derive the full benefits of their investments by having their dividends paid directly into their bank accounts as soon as these are disbursed by issuers, regardless of whether these are savings or current accounts.

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