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CAPITAL MARKET: DECLINING INVESTORS' CONFIDENCE WORRIES SEC

By NBF News
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BY MICHAEL EBOH
The Securities and Exchange Commission, SEC, has expressed concerns over the lack of confidence in the Nigerian capital market exhibited by investors, saying this will hinder the quick recovery of the market.

SEC, in a statement made available to Vanguard, blamed the declining investors' confidence on the prevalence of poor corporate governance, exhibited by a number of market operators and quoted companies and also poor market enforcement of rules.

SEC also blamed the unattractiveness of the market on the enduring consequence of the global financial and sovereign wealth crisis in Europe, which it said has adversely affected the Nigerian market in no small measure.

The statement said, 'The low point, however, remains the significant and sustained loss of investor confidence which has sent key performance indicators on a consistent slide. 'This was engendered by the aggregate effect of the governance lapses and poor market enforcement of old which led to significant erosion of value for equity holders.

'The enduring consequence of the global financial and sovereign wealth crisis in Europe has compounded issues; market recovery in Nigeria can therefore be a near term prospect. It can only happen in the medium and long terms after the reforms being undertaken by the SEC Nigeria and the NSE would have taken firm root and been complemented, hopefully, by a lift of the pall on the world economy.'

Furthermore, SEC commended the interim administration of the Nigerian Stock Exchange, NSE, for bringing about a revival in the financials of the Exchange in the 2010 financial year.

SEC said the NSE's 2010 Annual Report and Accounts justified its intervention in the market, which brought a change in leadership in the NSE, adding that it is an indication that the intervention was timely and correct, especially as the declining performance of the Exchange has immediately transformed to surplus.

According to SEC, in the Annual Report and Accounts, the Nigerian Stock Exchange moved from a loss position of N2 billion in 2009 to a profit of N357 million in 2010.

SEC said it led the process that produced the improved NSE results through its reform and regulatory oversight on the Exchange, adding that its representatives serve on the board of the NSE have been providing required support for the Exchange.

'Judging by the improved financial position of the Exchange, stronger enforcement regime and innovations such as the introduction of Exchange Traded Funds, ETFs, commitment to stimulating performance in the fixed income market, energies invested in demutualization, efforts at getting multinational corporations, MNCs in oil and gas as well as telecommunications to list on the Exchange, etc, the Interim Administration has acquitted itself quite creditably,' the statement said.

The statement reads further, 'It will be recalled that on August 4, 2010, SEC, in a regulatory move intervened in the management of The Exchange. On 5 August, SEC removed Prof. Ndi Okereke-Onyiuke as Director-General of The Exchange.

'SEC also directed Alhaji Aliko Dangote to cease acting as President of the Council of The Exchange in compliance with a court order nullifying his election as President and pending the outcome of ongoing litigation.