I really can’t say I know much about the Nigerian stock exchange market, but I know that there has been a lot of talk about it for some time now. The investors are scared, government don’t want it to affect the economy and wants to prevent it and also firms and industries are trying their best to work out a measure to enable investors see it as temporary set back. They have even gone to the extent of giving bonus shares. But I wonder were that is coming from.
Today on a Nigerian paper, I read that the intervention by the government and stack holders has started yielding positive result. From the 2.2 per cent loss, amounting to some N200 billion on Monday – described as the highest daily loss – the market gained N280 billion, representing a 3 per cent rise yesterday. A total of 72 listed companies made price gains, 57 of them recording the maximum gain of 5 per cent. At the end of trading yesterday, the All Share Index rose by 3.1 per cent from 43.19 trillion to 44.57 trillion. Similarly, market capitalisation rose from N8.808 trillion to N9.08 trillion, an increase of about 3.1 per cent.
The recovery plan announced yesterday included 20 per cent buy-back of shares by companies; reduction of market operators’ fees; introduction of a capital market stabilization fund; review of the country’s liquidity situation; and a review of trading rules. The new trading rules reviewed the band for daily price movements – a reduction of the five per cent maximum downward limit to one per cent, and the retention of the five per cent upward movement.
Although some investors have express their fears that, this is only a temporary cure to the problem, they say a proper investigation should be carried out on why price has been dropping and what can be done to put a lasting solution to the problem. Some economic analysts believe that the new process will work as long as it is maintained and followed as such.
I believe on the other hand that this is the best time to buy shares, knowing that all over the world, the global economy is on recess, and will rise soon. This I strongly believe will boost the NSE (Nigerian Stock Market). This is the time to take a bold step, for both local and foreign investors.