A former Council Member of the Nigerian Stock Exchange (NSE) and currently Board Member of the Investment and Securities Tribunal, Mallam Garba Kurfi, has hailed the move to completely demutualise the Nigerian Stock Exchange (NSE),saying it would lead to a more virile stock market, activate idle capital and boost economic activities.
As part of process to complete the demutualisation, NSE members would on March 3, hold a mandatory court ordered meeting and extra-ordinary general meeting to pass resolutions for the exercise.
However, speaking at the Capital Market Correspondents Association of Nigeria (CAMCAN) first quarter forum in Lagos, wednesday, Kurfi said the demutualisation of the NSE would make the exchange to function better like its peers such as the Johannesburg Securities Exchange (JSE), Nairobi Securities Exchange (NSE) that had already undergone the process.
“It is a good thing and all of us are going to be happy at the end of the day because it is going to unlock more capital for the market. For instance if I place shares as collateral, I can trade and make money, we are pleased this is coming after so much delay,” he said.
Kufrfi, who is also the Managing Director/Chief Executive Officer of APT Securities and Funds Limited, said the market would close 2020 on positive note after declining in 2018 and 2019.
“The NSE All-Share Index is likely going to close 2020 positively and record close in double digits growth. Both technical and fundamental analyses move to the positive direction. However, the market may experience volatility because of the changes in the reporting financial reports as adopted by the exchange without adequate awareness of the brokers. Also, I foresee banks unlikely to make more profits like they did in 2019 because they are pressured by the Central Bank of Nigeria (CBN) directive to meet up 65 per cent loan to deposit ratio (LDR),” Kurfi added.
But he noted that the review of Cash Reverse Ratio (CRR) from 22.50 per cent to 27.50 per cent by CBN would redirect funds into the stock market, explaining that the restriction placed by apex bank on Open Market Operation and Treasury Bills participation, if sustained, would also impact positively on the stock market.
Speaking on the sectors that investors should focus on, Kurfi said companies that benefit from Value-added tax (VAT) exemption such as water, sanitary products, will likely to declare better profits.
He added that building material companies such as cement firms, are likely to double their turnover and bottom-line because of early implementation of the budget and focus on infrastructural development.