EXPERTS PREDICT BLEAK XMAS FOR STOCK MARKET PLAYERS…NSE DG SAYS CNN FRIGHTENED NIGERIAN INVESTORS

In an extension of the warnings of FORTUNE&CLASS Weekly to investors not to be quick to excitement in the wake of the sudden resurgence of stock prices at the stock exchange, some stock market analysts have predicted a bleak Christmas season for stock investors that are hopeful of making some gains in the market to supplement their expenditures during the Yuletide season.

FORTUNE&CLASS Weekly, had, in a special review of the stock market in its issue 43, informed the investing public to be wary in rushing to the market in the expectation of reaping a bounty because of the surge in price. The report revealed that the ascendancy of the bull in the market was merely a machination of the early birds institutional investors and financial institutions that had, in collaboration with selected stockbrokers, driving market prices of targeted stocks with intention to dump when prices of the selected stocks attain pre-determined price threshold.

With the market reversal to the pre-eminence of the bears as characterized by persistent price declines, market analysts have dared to warn that the market till the second quarter of next year (2009) will be a play ground for institutional and financial sector speculators that have some liquidity to play the market to recoup losses earlier incurred.

“An overview of the market shows that most institutional players and financial sector investors are only interested in salvaging what they can of the loses they made when the market started experiencing the downturn.” One of the analysts reasoned.

“The fact is that this category of investors entered the market when stock prices were at the bullish high, just at about that time prices commenced dramatic fall. So, what these investors are doing now is to raid the market which, in truth, has many fundamentally strong stocks that are selling at rock bottom prices. Before the return to the recent round of price decline, you will observe that about eight stocks appreciated by 25 percent and above, so, it made good business for these speculators to dump their shares and take profit. This is what led to the market slip to the bears once again.”

Speaking on the prospect of a stock market rebound as the Christmas season approaches, another market analyst said the illiquidity in the market still persist just as confidence building by regulatory authorities falters.

“The hope of a rebound in the market as Christmas approaches is quite bleak. Do not forget that we have two major celebrations in December, that is, the Idel Fitri and Christmas. Now, most people would want to raise money for the pleasure of these two celebrations. Either the market is low or not, there are so many investors whose store of wealth is actually locked-in in their stocks, so naturally, they will approach the market to sell what they can dispose off. This will add to the surfeit of stocks in the market and, of course, when there is a continuation of stock dumping, the market appreciates in the negative.

“I must, however, say that this review is not absolute, government may decide to intervene before then or the Central Bank of Nigeria may introduce some revolutionary approach to salvage the market from the bears, however, if this is not done, I think market speculators would become set in their ways. The scenario I see is that a number of high profile stock broking firms with the banking of some commercial banks can target selected stocks, conduct a raid on them and once the prices appreciate to a certain level, they sell off within a short period. This is what we experienced about two weeks ago.” The analyst posited.

Meanwhile, the Director-General of the Nigerian Stock Exchange, Prof. (Mrs.) Ndi Okereke-Onyuike has argued that Nigerian investors were frightened away from the capital market by the global influence of the Cable News Network (CNN).

In a chat with Proshare Nigeria, an online investment focused platform, Prof. (Mrs.) Okereke Onyuike explained that the global phenomenon ought not to affect the nation’s capital market.

“What happened the last time was a global phenomenon; which ought not to affect our market; because the fundamentals of quoted companies in our Nation’s Stock Exchange are strong and resilient. Investors always join the bandwagon; however, the global influence of the CNN actually frightened our investors and caused the panic selling.” The Stock Exchange DG said.

“As these investors observed events, every market in the world was coming down, they did not realise that these Markets were coming down due to certain fundamental issues that went wrong in the Western economy. Investors in Nigeria believed that as things were coming down in places like New York, London, Paris and other advanced economies; that Nigeria would also be affected and maybe worst hit. They didn’t realise that in our case we are not too exposed to foreign investors. Maybe their (foreign) participation in the market is less than nine percent (9%). This coupled with Portfolio Managers who dumped shares and even then, the dumped shares were bought over by Nigerians. Therefore, it was the media panic; specifically CNN that frightened our investors.” Prof. Okereke-Onyuike further affirmed.

Pleading with investors to resume participation in the Nigeria stock market, the DG said: “I am urging Nigerian investors to come back to the Market, there is no need running away from it. We are trying to rebuild the confidence in the Nigerian Capital Market because our quoted companies are resilient with strong fundamentals. Take for instance an organisation like Union Bank of Nigeria Plc (UBN). What are the reasons investors would not want to buy shares of the Bank? The Union Bank stock is selling and has strong fundamentals coupled with a superlative performance.

“Most of our quoted companies, about 90 percent (90%) of them, are doing well. They have not really been affected by the global meltdown. The glut of shares in the market that contributed to its temporary meltdown was due to the fear created by media like CNN on issues relating to the Western World, with this development, like I said earlier on, the Nigerian investors thought that it would be worst in the country; thereby they started dumping their shares.

“However, I think that investors are beginning to gain back confidence in the market and they are also observing that there is nothing wrong with our quoted companies. Those in the Manufacturing, Banking and other sectors are doing well bringing out their results. There goods and services are more in demand than supply, so there is nothing wrong with the market like I said earlier.” The DG elucidated

Noting that it would be a while before the stock market drives its way back to the highs it attained before the decline, Prof. Okereke-Onyuike said: “This is the best time to invest though it will take a little while for the share prices to go back to the original levels they were. Therefore, I advise investors who have liquidity to buy shares in the nation’s stock market; the best time to buy is when prices are low,” She explained.

FINALLY, OTEDOLA BREAKS MONOPOLY WITH 2MILLION TONNES OF CEMENT

The persistent rise in the price of cement, an essential building material, may be heading for a reverse with the Federal Government approval granted Femi Otedola to import 2million tonnes of cement into the country.

The cement which a source close to the CEO of Zenon Oil and Gas said will soon land in Nigeria, is believed to be one of the Federal Government strategies to in the short run avail the Nigerian market cheap supply of cement.

“Of course, the Federal Government is aware of the fact that hitherto, the supply side of cement is controlled by a close knit community of suppliers who had turned cement supply into an open monopoly.” The source said.

“Though Federal Government had lifted the ban on importation of cement since January as part of the strategies to correct the shortfall in the supply of cement believed to be in the region of 11.5million tones, the efforts of the first batch of companies granted the right to import have not shown yet in the market. I think due to a combination of liquidity crunch in the nation’s financial sector and the global financial crises which have made access to credit a tasking process, most of these players might not have been able to bring in enough supplies of cement into the country. Naturally, the Federal Government had to make overtures to Mr. Otedola, who, they think has enough liquidity to break the strangle hold of the monopoly that cement supplies had turn.” The source revealed.

The source further added that the importation of cement by Otedola is going to be a continued process until the price of cement becomes affordable to the common man.

“This, I think, is going to be the first in the process to crash the price of cement. I am informed that the price of the first importation to be undertaken by Otedola should sell between N600 and N700, the calculation has been done. I think that after this consignment, others would be brought into the country until the price of a bag of cement becomes affordable to the average intending home owner.” The source added.

In response to a question on the impact of wholesale importation of cement to local cement manufacturing capacity, the source reasoned that the importation policy is an interim measure to assuage the difficulties in the building sector.

“I don’t think it is proper to allow Nigerians to wallow in the difficulty of unrealized dreams in real estate because local capacity has to be protected. Nobody is stopping the growth of local manufacturers, I know that government is encouraging that aspect of the sector by also opening up the space to intending manufacturers who are also given adequate incentive, the importation is an interim measure as I had said, to bring down price in the immediate.” The source submitted.

IN THE SQUALOR OF THE RULE OF SILENCE

Last week, I confirmed an appointment to meet with a United States of America based journalist and researcher. He told me on phone that he was in Nigeria to research and evaluate the country’s financial sector with a view to submitting a report that will form the basis of Nigeria’s financial sector country report to his principal, a respected magazine in the US.

My talking date was scheduled with the foreign journalist on account of the content of FORTUNE&CLASS Weekly. He had excitedly talked about the magazine serving most of his information needs on the subject of his research and investigation in Nigeria, contents he could not get to see in other media class. Of course, I was humbled and though, I was in quandary on what exactly I was going to tell a foreign journalist on a mission to unearth hidden facts in the remote crevices of the nation’s banking halls and regulatory agencies.

I was caught between my intense patriotism for everything that can be possibly good about this country and knowing that an interview session with a journalist also means that I may fall into those emotive moments that a subject of an interview unconsciously fall into with the consequence of, perhaps, revealing some of those facts that won’t do the sector at issue good in international circles. Of course, I am a journalist, so I know how these things work, before you corrected yourself you would have crossed the boundary with some blabbing, remarkable to the journalist but embarrassing for me.

I may have to apologise on behalf of the media in Nigeria, it is a culture, you know; media practitioners, even around the world censor information, often, because of the practical standard of minimizing the extent of perception damage to an institution or sector.

The talking date didn’t happen after all, though we shifted the appointment twice, we could not get to meet. It suddenly turned out that the journalist’s temporary residence on Victoria Island, Lagos, was a travelling distance to my office in Ikeja, Lagos. The poor journalist made frantic efforts to get to Ikeja two times but he was not quite knowledgeable about the hours of convenient movement in the state. He always ended up in a traffic gridlock, and the two times he was compelled to ask his cab driver to turn back at the next access road; incidentally, such an access road won’t be available until he gets to the Gbagada end of the 3rd Mainland Bridge where he’s also confronted with a non-moving lines of vehicles.

Well, as it were, I guess the Lagos traffic logjam helped out of a dilemma for the first time. Courtesies won’t allow me to reject an interview appointment with a colleague practitioner but, I was quite apprehensive that some information may not be right for this kind of discussion. So naturally, I was not going to encourage the journalist to get to Ikeja, and I refused to offer the option of locating him on the Island.

The kernel of my revelation here is that most of us have become co-conspirators in the some what cultic ways of information dispensation. The Mafian rule of absolute silence dominates information processing and dissemination; I ascertained the journalist must have been convinced he was not getting the quality of information he needed from official quarters, the reason he resorted to self help.

In self respecting countries, information is key, either in political governance or corporate relationship. To get required information that are in the public domain, all one needed do was to go on dedicated website or get a journal of the government agency or company you wanted to know its details. It’s that simple.

This tells much on the integrity of information, where information is treated as a prized jewel to be hidden in the bunkers of atomic bomb as it is the culture in Nigeria, concerned communities of the agency or company treat such information with a strong dose of suspicion. This has become so endemic that routine statistical information from the office of statistics is addressed with nonchalance in the public place. Bank statements of account, a document that is supposed to be sacrosanct in facts and details, are for Nigerians, another fanciful fictional paper work conveyed to the public in consummation of lip service to the satisfaction of a legal requirement that has lost all its potency of sanction many years ago.

Disclosure in governance and corporate relationship is essential to confidence building and until the breach of this is punishable not by the letters of laws but by political will, the nation would continue to flourish in the appalling cesspit of wheeler-dealing, creating a continuous circle of privileged insiders and ignorant outsiders.

Can the parliament take another look at the Freedom of Information Bill, please.