How Nigeria’s stock market will survive COVID-19 – Experts

Some experts are optimistic that capital market would recover from the devastating effect of the COVID-19 pandemic and rebound in 2021.

NAN reports that the capital market lost N1.71 trillion or 12.54 per cent as market capitalisation fell from N13.657 trillion on Feb. 28 to N11.945 trillion as at close of trading on April 20.

The decline in capitalisation was attributed to the exit of foreign investors due to currency risks and the crash in the global oil price as aftermaths of the COVID-19 pandemic.

The experts, however, said the capital market had shown signs of recovery in the last couple of days, and that if government’s stimulus packages were appropriately channeled and executed the market would rebound in 2021.

They said stockbroking firms should seek ways to recapitalise and embrace merger to achieve economies of scale during the post COVID-19 era.

Uche Uwaleke, a Professor of Finance and Capital Market at the Nasarawa State University Keffi, urged the capital market players to map out strategies to keep the market afloat in the post COVID-19 era.

He said the Securities and Exchange Commission (SEC) should continue to implement investor confidence-building measures with emphasis on e-transactions, including its zero tolerance on infractions and ponzi schemes.

He added that the Exchange should speed up its demutualisation process to make room for more capital needed to upgrade trading information technology infrastructure made imperative by COVID-19.

“In order to be more efficient, achieve economies of scale as well as effectively comply with Minimum Operating Standards set by the Exchange, stockbroking firms should seek ways to recapitalise including the option of merger,” he stated.

Uwaleke said the government should quicken the process of restoring growth and making the domestic environment conducive for both local and foreign investors in the stock market.

“One of the strongest influences on foreign portfolio investments in Nigeria going forward will be the recent monetary and fiscal policies’ shifts which tend towards a free market economy,” Uwaleke added.

Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, said many quoted firms would record losses at the end of COVID-19 which would affect dividend negatively.

He urged the regulators of the capital market to assist quoted firms to access intervention packages from government to boost their businesses and hasten the recovery of the market post COVID-19.

Tella added that the regulator too might develop special conditional package for raising funds in the capital market for existing quoted firms and listing requirements for potential firms. (Agency report)