SEC Nigeria stands up for the Retail Investor

Dear Africa interested individuals:
                                                        On Monday, April 25, 2016, I wrote an article on this blog titled: 

"Nigeria All-Share Index: Retail investors will determine how it moves."  


I have been a vocal proponent of retail investors being given the necessary support to return in droves to the Nigerian stock market and for their outstanding grievances to be addressed e.g. the dividends not yet paid out for banks that were taken over by the Central Bank (Bank PHB, Afribank etc) during the tenure of Sanusi.  Where is the money?  No one is talking. 

The Nigeria Stock Exchange (NSE) leadership has a different opinion.  Retail investors should be pushed to invest indirectly in the marketplace by investing in mutual funds instead of directly purchasing equities into their own accounts.  Some mutual fund companies were even engaged by the NSE to do investor education (of course marketing their funds) to retail investors to drive this agenda.  
I have been and will remain adamant that the Nigerian stock market needs retail investors to en masse return to the stock market with whatever amount they have in their possession if the market wants to be even keeled.  The Nigerian stock market achieved its highest index value in March 2008; this is also when foreign investor participation peaked.  Foreign investors were in when the market achieved its all-time high and the market has been on a topsy turvy decline since then.  Retail investors drove the market between the second half of 2006 through 2007, not foreign investors.  The alienation of retail investors through a variety of unfavorable policies and business decisions has been the bane of the NSE All-Share Index performance over the years.  There are other reasons, but, the alienation of domestic retail investors directly and indirectly is the foundation of the market's decline.  
Where are the foreign investors that were waiting to jump in with their millions of dollars after the naira depreciated in 2016?  More importantly, the index performance is still in negative territory. Nigerian Bank price-earnings ratios are collectively the lowest in Africa.  No foreign institutional investor appears to be excited enough to invest heavily over a sustained period of time despite the relative cheapness of bank stock prices.  So what's missing?  In a hyper-inflationary environment, the best way to protect yourself (besides buying things in bulk instead of piece-meal) is to invest in equities.  Despite this, market participants in Nigeria (brokerage houses and investment banks) continue to ignore their own and seek foreign intervention in their market.  There is a proverb in Nigeria translated means "what you need that takes you far and wide in search of is actually right next to you."  Retail investors must be brought back and given the much needed platform to invest wisely and directly!  Their grievances from the boom and bust of 2007 & 2008 must also be addressed.  

I am happy the Securities and Exchange Commission (SEC) of Nigeria has formally announced a plan to open up the stock market to retail investors.  The SEC said the lack of adequate retail investor participation has subjected the stock market to extreme fluctuations driven by foreign investor market participation volatility.  

I will keep standing up for what I deem to be logically right even if unpopular.  The SEC has finally aligned with my stance and has set the ball in motion.  I am thrilled though, this is just the beginning. When you keep shouting, one day someone worthwhile will listen.  Such is life; patience is a virtue.  Retail investor, your cry is gradually being heard.  I stand with you and always will.  

  Tell others to tell others about this Africa Research Blog; the financial TRUTH is here.       

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