Market operators optimistic about new listings rules

Nigerian Stock Exchange

Market operators in the Nigerian Stock Exchange (NSE) are optimistic that the newly listings rules for companies intending to be quoted at the Exchange would yield the desired result over time.

Some of the operators who spoke to Premium Times said the new rules, which became effective from April 1, 2012, would boost investors’ confidence in the market as well as encourage and attract more participants from the various sectors of the economy.

A market analyst and chief executive officer of Resources and Trust Company Limited, a business advisory firm, Opeyemi Agbaje,  said encouraging more firms to come to the floor, “not through cohesion, but through the improvement of the stock market itself and the cost of listing,” is a good step in the right direction.

 “Clearly, if we get some key sectors into the market, the market will grow exponentially,” Mr. Agbaje said. “Key sectors like the telecoms, the upstream oil and gas, and even reforms in the solid minerals (getting huge mining companies to come into the country) will further boost performance of the market.”

Mr. Agbaje however said the current state of the market makes the NSE’s $1trillion market capitalisation for 2016 a difficult task. “If you look at where we are now, you’ll be concern about the realisation of the target,” he said. “I think we should focus on this kind of things that the Exchange is doing to encourage more firms to come to the market.”

The Securities and Exchange Commission (SEC) last month gave a nod to the NSE on its amended listing rules, one of which stated that a company that sought listing must have been in operation for at least three years, as against the initial five years requirement.

The Exchange said it embarked on the review of the rules, including reinvigorating business development in order to achieve a market capitalisation of $1 trillion in five years; pay more attention to rule drafting and interpretation for market participants as well as aggressively pursue the listing of privatised government entities and significant corporations in different sectors.

“As far as investors are concern, if the revision of listings rules will make the capital market to bounce back, then we have no problem with that since this will also attract more companies to list at the Exchange,” the national chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said.

“Three years tract record for companies that want to list at the Exchange is still okay. With the three years indices, investors can still adjudge their experiences, see how they have run the companies, and estimate whether they can stand the test of time. For instance, investors can look out for how much dividends have these companies been able to pay among their directors. That could be a good yardstick to judge them.”

On the NSE’s $1trillion market capitalisation target by 2016, Mr. Okezie said he does not see the NSE achieving that target.

“Anyway, anybody can dream, but it depends on when or if the dream will materialize,” Mr. Okezie said. “The Exchange is still dreaming, because I have not seen anything on ground to attract such. The regulators themselves have to wake up. The fact that they are still having overbearing influence on the Exchange is a hindrance to realising such target.”

On the on-going probe of the capital market and its regulator, he said the revelation from the probe has affected investors’ confidence in the market.

 “The confidence is no more there,” he noted. “But that should not stop the probe. The ad-hoc committee should ensure the probe goes on. What we (PSAN) are still insisting is that the Director General of the Securities and Exchange Commission, Arunma Oteh, should step aside, because her image has been tainted. There is no credibility. She can’t preside over that commission with all the unlawful spending credited to her.

 “If she continues to be there, then there will be no confidence in the market at all. The earlier she steps aside, the better for the market. Those allegations and counter-allegations do not augur well for the market. In a normal market, she would have resigned by now.”

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