For the much-awaited demutualisation of the exchange to attract huge investment needed to rejuvenate the stock market, experts have stressed the need for regulators to create more investible products and revive the second tier market before kicking off the process.
The experts also argued that the scope of the market must be expanded to give investors choice for diversification and help the market compete with other exchanges in the world.
A chartered stockbroker and a Professor of Finance & Capital Markets, Prof. Uche Uwaleke, argued that the current size of the capital market constrains its role in national economic development.
Already, the market liquidity, as measured by trading volume and turnover, has been adjudged comparatively low, with the issuer base, also not diversified.
Specifically, industry composition in the stock market is concentrated in a few sectors, namely, consumer goods (especially Nestle and Nigerian Breweries), while industrial goods are driven by Dangote Cement.
According to the experts, the regulators must ensure that the market is ahead of trendsetters, when compared with other global market to enhance the process.
The Chairman, Centre Point Investment Limited, Dennis Odife, argued that regulators should create products that would help deepen the market before embarking on the demutualisation process, especially on how to revive the second tier market.
He added that if the scope of the market is expanded, it would give investors choice for diversification and help the market compete with other exchanges in the world.
The Chief Relationship Officer of Foresight Securities Limited, Charles Fakrogba affirmed that affirmed that demutualisation can go hand in hand with improving the board of AseM.
“The Nigerian Stock Exchange (NSE) has been doing all it can to ensure that every segment of the market is up to speed with current realities.
I believe that it is good to revive the AseM NSE that is demutualised will not stop further improvement of its operations.”
The Managing Director of Highcap Securities Limited, Imafidon Adonri, affirmed that NSE has further relaxed the stringent conditions for listing on ASeM, but SMEs are not taking advantage to list.
“There are numerous products already and very soon, core derivatives will be added. The capital market is underperforming now due to low investor confidence in the country,” he added.
Source: G Business