Many Capital Market Operators to close shop by Q2 2009

Many Nigerian Capital Market (NCM) Operators may close shops by the second Quarter (Q2) of year 2009. Martin Oluba, renowned Economist and Capital Market Expert made this affirmation in Lagos Nigeria at a morning session tagged “Starting the Year with a Clear Purpose” organised by Proshare Nigeria Limited.

In his paper “The Capital Market in 2009: What investors must know?” Oluba affirmed that it is evident from the Market gloom that many operators may close shops within the next six months.

“It is evident from the Market gloom that many operators in the Nigerian Capital Market will die within the next few months” he said.

He further affirmed that at present, many of the firms are finding it difficult to pay the salaries of their members:

“This, therefore, calls for many likely initiatives. One of such is mergers and acquisitions as well as organisational refocusing and repositioning” Oluba said.

Oluba also affirmed that some of these firms are set up just to deliver dealing activities and thus, their expanse of skill availability ends with Stock trading.

“Regrettably too, up to 80 percent (80%) of all instances, these firms are equally poorly capitalised” Oluba affirmed.

He again affirmed that the prosperity of the Capital Market depends on the prosperity of the economy

In the paper, Oluba confirmed four factors that would drive the Capital Market and make it flourish; these include income levels of the investors, their evaluation of the current and potential performance of the company that offers a security, risk perception and the role of Market Regulators.

Oluba also affirmed that three of these factors; except the Regulators are overall three important considerations for flourishing Capital Market existence.

In the same vein, huge trouble awaits the Real Sector of the Nigerian Capital Market in year 2009. “The Real Sector would be hurt the most in the Nation’s Stock Market in current year 2009” Oluba predicted.

Earlier, Okpara Mike Ezeh, a Capital Market Operator and the Managing Director (MD) of Crane Securities Limited, (Member of the Nigerian Stock Exchange) had confirmed to Proshare NI in a CEO Q & A that the Primary Market was the worst hit in year 2008.

“The Primary Market became more or less extinct during the meltdown; because no investor wanted to expose his or her investment to a company when they cannot confirm when the company would be listed on the Floors of the Exchange. And if they are listed today, from experience, the price would start going down” Ezeh said.