By Goddy Egene
The founder, Investment Banking and Trust Company (IBTC), Mr. Atedo Peterside has said macroeconomic stability, especially low inflation rate regime, will attract many investors to the Nigeria’s capital market.
Speaking after he was conferred with Honourary Fellowship by the Chartered Institute of Stockbrokers (CIS) during the induction of 62 newly qualified stockbrokers into associate members in Lagos at the weekend, Peterside explained that fear of devaluation of the Naira in the wake of 12 per cent inflation rate with potential for further increase had elicited flight for safety, as local and foreign investors are taking short term bet on foreign currency as a hedging strategy.
The banker, who absolved stockbrokers of the blame for persistent selling pressure leading to persistent decline in prices of shares, said the bearish trend in the market is due to unstable macroeconomic environment.
“ The problem of the capital market is not the fault of stockbrokers but that of macroeconomic stability framework. In Nigeria, the inflation rate is currently 12 pe rcent, compared to two per cent in the United States of America. The inflation rate in Nigeria provides incentives for devaluation of the Naira and many investors fear devaluation.
“ The fear of devaluation in itself is pushing many investors towards buying foreign currency as a short term bet to speculate exchange rate. The Central Bank of Nigeria (CBN) has increased the loan to deposit ratio ( LDR) which requires banks to make loan or stop collecting deposit. With the current low interest rate, the policy is punitive. The CBN should bring inflation down to five percent to stabilise the economy,” Peterside said.
In his address, the President, CIS, Mr. Adedapo Adekoje explained that the Institute’s Board of Fellows approved honourary fellowship for Peterside in recognition of his intellectual and professional contributions to the growth and development of the capital market and economy as a whole.
Adekoje noted that Peterside had served Nigeria in various capacities, including: Chairman, Technical Committee of the National Council on Privatisation which culminated in the landmark privatisation of all electricity distribution companies in Nigeria and Chairman, the Committee on Corporate Governance of Public Companies in Nigeria among others while he is currently the Alternate Private Sector Vice Chairman of the Nigerian Industrial Policy and
ompetitiveness Advisory Council.