By Goddy Egene
The market capitalisation of the Nigerian Stock Exchange (NSE) has declined by N173 billion as the euphoria that greeted the completion of its demutualisation gave way to apprehension and anxiety among stakeholders.
The news of the completion of the demutualisation last Wednesday had sent excitements to the capital market community. Although there are expectations that the demutualisation of the exchange would benefit the market and the economy generally, the market has remained bearish.
Between last Wednesday and Monday this week, the NSE capitalisation has declined by N193 billion, falling from N20.369 trillion to N20.176 trillion, while NSE All-Share Index depreciated from 38,931.25 to 38,561.84.
Some market operators attributed the decline to the ‘wait and see’ attitude of investors, who they said, were waiting for more clarity on the next step the exchange would take to ensure smooth transition to the new status.
A stockbroker and Chief Executive Officer of CEO, Sofunix Investment and Communications, Mr. Sola Oni, had said: “some investors may adopt wait and see attitude due to lack of understanding of the benefits while nervous ones will not hesitate to sell off their stocks.”
According to him, the NSE would need to do a lot more on public enlightenment on the benefits of the demutualisation for them to understand better.
Another market operator said the exchange should bring more clarity on how it is going about the transition, stating the fate of all stakeholders.
“Since the NSE will now become a public company, how will it carry out its regulatory function? Will the shares be listed now or when? What will now be the level of corporate governance considering our environment? Will the common man have access to the shares? What about the stockbroking community, will there be new requirement for more capitalisation among others? These are some of questions agitating the minds of stakeholders and the NSE needs to provide answers,” the operator said.
The Chairman of the Chairman of Association Securities Dealing Houses of Nigeria (ASHON),Chief Onyewenchukwu Ezeagu, had said the completion of the demutulisation of the exchange was one of his happiest moments.
“The development is one of my happiest moments as the Chairman of ASHON having along with other critical stakeholders delivered on the mandate to demutualise the exchange. Demutualisation will enhance the effective transformation of not only the NSE but also the entire securities ecosystem in particular,” Ezeagu said.
Also speaking in the same vein, the Managing Director, Highcap Securities Limited, Mr. David Adonri, said the demutualisation was remarkable because the idea was muted over 10 years ago. “From today, the NSE has become a company which is driven by profit motive. Instead of ordinary and dealing members, it has shareholders now. Erstwhile dealing members are now clients of the exchange. The NSE can henceforth exploit all avenues for raising capital, instead of relying on the meagre contributions of its members. It is a big transformation wherein the possibilities are endless,” he said.
Adonri explained that the transformation would be monumental, saying that its relationship with stakeholders would change and become more commercially oriented.
“ Its activities will become taxable and it can be acquired or merged with any other company as situation arise. The holding company may be publicly quoted. In which case, it’s shares can be traded in the capital market. This will open it up as an investment outlet that will help deepen the capital market. This development can increase investors’ confidence in the capital market considering the enhanced corporate governance that will ensue. It is hoped that the new NSE will be competitive and also be more efficient in service delivery,” he declared.