‘Domestic investors dominate capital market activities by 60%’

The Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, has disclosed that the nation’s capital market is currently dominated by 60 per cent domestic investors as against 40 per cent foreign investors.

Domestic investors at capital market comprise of institutional and retail investors who are taking a position in cheap stocks listed on the NSE.

Speaking at the webinar entitled, “Capital Markets in a Pandemic,” on Wednesday he expressed that Nigeria economy in the last three months was facing dwindling crude oil prices and coronavirus pandemic have led to foreign investors exit from the capital market.

He said these challenges mounted significant pressure on the capital market volatility, stressing that The Exchange sustainability in operations played a critical role at domestic participation.

He expressed that the Exchange remote trading and engagement of market stakeholders is yielding results, with increase domestic investors participation and federal/ state governments decision to access bonds on the capital market.

According to him, “We have seen domestic players coming into the capital market in the context of foreign players doing flight to safety.

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“Over to 60 per cent participation in market activities are currently domestic players which is a major departure from the last four years where we show 50-50 per cent in terms of market participation by domestic and foreign players.

He explained that the continued trading that was activated at the early lockdown contributed to increased domestic investors, stressing that timely market information drive liquidity.

In his words, “During the lockdown, we kept the capital market opened. We immediately activated business continuity plans and luckily for us, the evolution of technology and digitalization at all capital market globally started before the pandemic. We were able to quickly flip the switch and go completely remote.

“We were reaching out to our dealing member firms via electronically and supporting corporate that are listed on the Exchange and putting out market-moving information.

“We engaged with policymakers and regulators to provide various palliatives and accommodations for market players to continue to drive liquidity in the market.

“What we have seen as a result is that there has been a significant increase in activity in the capital market at the secondary level, driven by domestic players.”

He expressed that companies are showing interest at raising fresh capital to boost capital base but not to survive the effect coronavirus pandemic.

He said, “Companies are showing interest at raising fresh capital to restructure capital base as a result of interest rate coming down to 12.50 per cent. We have seen not just corporate but state/federal government coming to raise capital to address deficit budgeting and balancing of a payment concern.

“I know that coronavirus has trigged the acceleration of capital raising for listed companies but if you look at companies that are just coming into the market, we have not seen IPO.

“In fact companies that are IPO building IPO are actually shifting them back.”

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