IN SEARCH OF A CONSCIENCE FOR THE STOCK MARKET

The nation’s stock market regulatory authorities and the money market counterparts have said for the umpteenth time that Nigerians need not lose sleep over the crisis wracking the membranes of global financial and stock markets. Of course, those that should know have acquiesced to this persuasion, except with the notification of the caveat of a more resistant strain to market rejuvenation that may likely afflict the Nigerian market for a while.

Ours had commenced a free tumbling in the early days of March, emitting in the initial tentativeness of fall, enough warnings of the Ides of March in the intensity of the momentum it intends to gather on its way down. The nation’s regulators merely talked of an early revival couching the hope of the market come-back on needed correction, the process after which the market will regain its sheen. Seven months after, regulatory authorities’ excuses for a market fall that has become protracted, are still tongue in cheek.

 The market, so far, has lost 35 per cent capitalization year to date, and that’s just by making a review of the All Share Index, fact is that the ASI, rather innocuous basis points, covers the attrition that had blighted some stocks prices.

FirstBank Plc, the doyen of Nigerian banking stock commanded a market price of N50 on 3 March, 2008 but the price as of 23 October was a miserly N23.72. now, that is more than a 50 per cent chunk off the all-time darling of investors. FCMB, FirstBank’s peer in the financial sector, exhibited peak price performance at N20 on 3 March, the stock price was, however, a delinquent N9.66 as of N24 October, showing a 50 per cent plus depreciation.

The rage of the bears is also consuming other once upon a time glamour stocks in other sectors. Food and beverages one-time investors’ delight, Dangote Sugar, is a sniveling picture of its old buoyant self at N19.07 as of 24 October down from N46.60 on 6 March, another 50 per cent wrench to the stock investors. LASACO, a leading light in the insurance sector, has lost all the shine at N1.76 as of 24 October, you can imagine that some investors bought the stock on 6 March at N5.15, I leave the percentage lost to your imagination. Evans Medical was on bid on 6 March when the market committed to it at N14, since then, it has descended the morbid curve to N4.91 as of 24 October, again percentage lost is left for he that knows where the shoe pinches. 

Even as the these stocks cascade in price, Warren Buffet’s primordial logic of buying cheap and selling high is not persuading once excited investors, they would rather look the other way. This, in my consideration, has to do with the confusion in the ranks of regulators. Since March 2008, investors have been assailed with some inconsequential policy measures, said by regulators to inspire market confidence. But no investor seems to dare place his/her faith on the confusing torrents of policies that regulators throw at the market in their condescension of understanding of what ailment afflicts the market but turning the market place into a pariah stage good enough for a nickel melodramatic performance. 

  The truth of present reality is that investors, veterans, old and neophytes, have lost confidence, and, if I dare say, absolutely, in the market and those that are responsible for managing it. Which investor wants to bother with the panacea of regulators that say one thing in the morning only to throw incomprehensible tantrums of the truth of the policy the afternoon of the same morning?

The market lacks a conscience in the mold of an individual regulator that investors believe is willing and ready to mitigate the hell storm that envelops the market. A regulator or collective community of regulators that are respected for their depth and selflessness, these are the individuals we require at this moment in the travails of the market.

My take, however, aligns with veteran Buffet. It cost N5million to acquire 100,000 units of FirstBank in March this year, some seven months after, it is just about N2.3 million to acquire the same stake in the storied stock, on the face of it, this is a great bargain. But only if one is sure of those regulators and their double speak.

The Nigerian macro-economic environment has given a good account of itself, holding steady in the face of the traducing of the global economy, this should be encouraging, but again, all things are not certainly equal here, there is so much suspicion of regulators and to an extent, some influentials in government. I do not think much can be achieved in market revival until investors see that some people who had actively contributed to the racy speed to a yet to be identified southward destination of the market, either by their actions or lack of it, are removed.  

But while we wait, I look forward to when the market bottoms out, hoping that this forsaken one per cent limit to downward movement of stock price is removed by those regulators, and pray fervently that luscious 100,000 units of luscious FirstBank, among other great picks, can be mine for a million naira. That would be the day. I am willing to go in before the band of down time pessimists and make their entries.