Capital market: Reps probe price stagnation of some quoted companies


February 28, 2018 | 3:22 pm
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Members of Nigeria’s House of Representatives unanimously resolved to investigate the stagnation of some publicly quoted companies, especially insurance companies listed on the Nigerian Stock Exchange (NSE).

The resolution was passed following the adoption of a motion sponsored by Femi Fakeye, who expressed concern over the alleged malpractice in the market.

Some of the lawmakers who spoke in favour of the motion, including: Deputy Speaker Yussuff Lasun; Uzoma Nkem-Abonta (PDP-Abia); Sadiq Ibrahim (APC-Adamawa) expressed regrets over the malpractices being perpetuated by the ooerators at the expense of investors.

The lawmakers observed that the operators collect huge remuneration at the expense of investors who stake their livelihood in stock exchange.

In his lead debate, Fakeye who called for the intervention of the House, called for examination of the declaration by the Honourable Minister of Finance on the performance of the Nigerian Stock Exchange (NSE) which she asserted to be the best in the world at the moment, based on the upward appreciation in the shares of some Public Limited Companies (PLCs) listed on the Nigerian Stock Exchange (NSE).

“The House is 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 in 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.

“The House is 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.

“The House is concerned that this 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 their investments,” he argued.

He also maintained that “if this trend continues unchecked, it could be a disincentive to the investing public, thus stifling the growth of the stock market.

“The House is again aware of the fact that the stock market is regulated by the Securities and Exchange Commission (SEC) and that both the NSE and SEC have the responsibility of protecting the interests of the investing public in order to sustain the growth of the stock market.

“The House is further concerned that quoted Companies in the Insurance Industry (the largest sector on the market) are the worst affected in this discouraging trend, made obvious by the fact that nearly all the twenty-six Insurance Companies quoted on the Stock Exchange have had their stock prices trading at 50 kobo par value for many years now,” he noted.

Following the adoption of the motion, the House mandated the Committees on Capital Market and Institutions and Insurance and Actuarial Matters to investigate the prolonged market dysfunction of the Nigerian Stock Exchange.

The Committee chaired by Tajudeen Yusuf (PDP-Kogi) was also mandated to review and confirm the pricing basis of the recent acquisitions of publicly quoted Nigerian Insurance companies; and to liaise with Nigerian Stock Exchange (NSE), Security and Exchange Commission (SEC) and National Insurance Commission (NAICOM) to take steps necessary to stem the trend, including the need to evolve new NSE listing requirements; and report to the House within eight weeks for further legislative action.




February 28, 2018 | 3:22 pm
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