In the aftermath of the crisis, equity capital formation started receding as financial assets took flight to safety in fixed-income securities.
This is because the financial fortunes of many retail investors are tied in some way to the market either directly through investments or indirectly through the pension funds. The initial enthusiasm that immediately greeted his victory in 2015 has since faded because investors were unable to identify any value addition to the capital market by his government.
For the insurance subsector, Hallmark Insurance dropped from 0.50 kobo to 0.33 kobo representing 34.00 percent loss while Aiico shed 32.00 percent to close at 0.68 kobo from N1.00 per share. Regrettably, the Nigerian capital market unlike in the past has in recent times contributed very little to the economic development of the country.
They maintained that there was the need to replicate in the capital market the reforms witnessed in other sectors of the economy like those in the power and telecoms sectors. In contrast, in Malaysia and other emerging economies, sections of even annual budgets are devoted to addressing government incentives for the capital market.
While other global markets have continued to boost their GDPs after the global recession, the nation’s capital market continues to trail behind that of peer countries. In his reaction on the issue, the Managing Director of Highcap Securities, David Adonri said the biggest disappointment is that President Buhari since assumption of office has failed to visit the capital market or make any policy statement that could spur activities in the market.
According to him, the government must attend to current lapses in the legal and regulatory framework by urgently constituting aboard for the SEC and appointing a management team. “Government should formulate policies to ensure that investors are protected, the capital market is fair, transparent and with low systemic risk. When this is achieved, Nigeria can utilise the capital market mechanism to mobilise long-term capital resources required to finance the public and private sectors in a balanced manner.
“This was due to a lack of commitment and strategic review to assess impact after exiting recession. The first thing the president should do is to formulate a policy to drive economic activity by providing infrastructures like power, road and human development in every sector to enhance productivity and output.