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Published On: Thu, Mar 1st, 2018

Reps probe prolonged dysfunction of Nigerian Stock Exchange

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The House of RepresentativesBy Christiana Ekpa Abuja

The House Representative yesterday mandated it committee on Capital Market and Institutions and Insurance and Actuarial Matters, to investigate the prolonged market dysfunction of the Nigerian Stock Exchange.
It equally mandated the committee to review and confirm the pricing basis of the recent acquisitions of publicly quoted Nigerian insurance companies The decision of the Lower Chamber followed the adoption of a motion on the “Urgent Need to Investigate the Stagnation in the Prices of some quoted Stock on the Nigerian Stock Exchange” by Rep. Femi Fakeye ( APC Osun).
Presenting the motion, Fakeye said, quoted Companies in the Insurance Industry (the largest sector on the market are the worst affected in the discouraging trend.
“Aware that investors who choose to invest money in buying shares of publicly quoted Companies expose their money to the risks inherent in the operations of the given Company and therefore reasonably expect to share in the profitability of such Company into two basic ways:
through dividends per share as declared by the Company and the appreciation in the price of the Company’s Stock, from time to time”
He said: “also aware of media reports on the daily trading performance of some Companies quoted on the NSE indicating positive earnings and profitability profiles but also listed on the Exchange are many other non-performing stocks, whose prices have remained pegged in one position, typically trading at par value over long period of time, for two to three years in some cases”
He disclosed that, the situation has the direct effect of short-changing investors in the stocks of such Companies, as such investors neither earn dividend nor have any growth in the quoted prices of the investment
“Concerned that if this trend continues unchecked, it could be a disincentive to the investing public, thus stifling the growth of the stock market.
“Again aware of the fact that the stock market is regulated by the Security and Exchange Commission (SEC) and that both the NSE and SEC have the responsibility of protecting the interest of the investing public in order to sustain the growth of the stock market”.
However, the Lower Chamber directed its committee to liaise with the Nigerian Stock Exchange (NSE), the Security and Exchange Commission (SEC) and National Insurance Commission (NAICOM) to take necessary steps to stem the trend, including the need to evolve new NSE listing requirements and report back to the house in eight (8) weeks for further legislative actions.

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