30th November, 2016
Some capital market operators on Wednesday called for downward review of the monetary policy to revitalise economic activities and boost investors’ confidence in the nation’s bourse.
They said in Lagos that there was the need to ease monetary policy as the current tightening stance of the Central Bank of Nigeria (CBN) was adversely affecting the stock market.
Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, called for the use of the right fiscal and monetary policies to stimulate aggregate demand.
Uwaleke said that injection of funds in an economy in recession especially into employment-generating sectors would go a long way in boosting stock market liquidity.
He noted that the Nigerian Stock Exchange (NSE) had remained on a negative territory due to negative economic indices and policies.
“This trend should not come as a surprise considering the nexus between stock market performance and the state of the economy,” Uwaleke said.
He explained that the major factor responsible for the bearish behaviour of the market was the continuing weak fundamentals of the economy recently confirmed by the National Bureau of Statistics (NBS).
“With negative third quarter GDP growth at -2.24 per cent, headline inflation rate at 18.3 per cent, monetary policy rate at 14 per cent and exchange rate at over N300 to the dollar, sell sentiments will continue to prevail in the market for sometime,” he said.
According to him, a reversal of fortune can only come with significant improvement in the economy.
Mr Ambrose Omorodion, the Chief Operating Officer, Invest Data Ltd., said that the persistent downward trend exhibited by the market had become a source of concern to all stakeholders.
Omorodion stated that the bearish sentiment in the market had reached its peak with increased sell pressure.
He said that many investors were becoming more cautious than before due to high inflation rate and lingering negative GDP.
Omorodion added that decline in money supply had further put pressure on the economy and the stock market.
He, however, urged the Federal Government to introduce effective fiscal policies that would impact positively on the economy in no distant time.
Omorodion said that investors should combine technical and fundamental analysis for trading decisions.
Mr Boniface Okezie, President, Progressive Shareholders’ Association of Nigeria (PSAN), urged the government to help the market to grow by pumping money into the economy to boost activities.
Okezie also said that market regulators should pursue strategies that would make investors to regain confidence in the market.
He stated that regulators should look inwards on ways to bring back local investors to the market rather than look for foreign investors that could exit from the market anytime.
Okezie claimed that policies and actions of market regulators made investors to shun the market.