The Securities and
Exchange Commission (SEC) has thrown its weight behind the proposed
extension of trading hours by the management of the Nigerian Stock
Exchange (NSE) despite criticism by some market operators that
aftermath of such action will not favour the nation’s bourse.
The interim
administration of the NSE, led by Emmanuel Ikazoboh, had announced that
it will increase trading activities by another two hours within the
next one or two months. But the move, which will take trading hours to
seven and further allow American investors to participate in the
nation’s capital market, was condemned by some operators saying the NSE
should direct its effort at encouraging more local participation.
Nigeria will benefit
Arunma Oteh,
director general of SEC, at the commissioning of the NSE’s Contact
Centre recently, said the country’s economy will benefit from another
extension of trading hours as against what was believed in some
quarters.
Ms Oteh said, “In
some of our interactions with foreign investors, their expectation is
that we will further extend the trading period to allow them sufficient
time to participate adequately in our market,” adding that such
development is good for the economy. “I do hope that the Exchange will
study this issue and be able to look at further expanding the trading
hours,” she said.
Ms Oteh also said
that the transformation of the Exchange, which Mr Ikazoboh started,
will continue under the incoming administration.
“The public should
not worry about continuity considering all the plans that still needs
to be done to transform the Exchange. Oscar Onyema, the chief executive
officer designate of the NSE, is still expected to resume in April.
From what the interim council and head have shared with us at the SEC,
the expectation is still that Mr Onyema will start early in April,” she
said, adding that “the approach that the interim administration is
taking is to build an institution that will not be dependent on
individual. What they have built is something that will stand the test
of time.”
‘Statement not concrete’
Meanwhile, Mr
Ikazoboh said his recent announcement on the extension is tentative.
“We are going to watch the market further. If we see that traded
volumes are increasing as a result (of the last two hours extension),
we’ll consider increasing it by another two hours. The (previous)
announcement is not a concrete statement. What happens in the next few
months will determine whether we need to increase the trading hours
again.” However, he said, “the indication is that with the (last) two
hours increase, volume of transactions from foreign investors increased
and this is because the timing differences between our zone and the
United State’s zone. If they are only able to make order within 30
minutes of our market closing and volume has increased, it means that
if we increase it by another two hours, our volume will definitely grow
further. I think it is something the council will look at and I am sure
figures will determine whether they will give the approval or not.” The
NSE had last December extended the trading hours from 9.30 am to 2.30
pm as against the former 9.30 to 12.30 pm.
Available data for
the two months preceding the extension of the trading hours with the
two months of the extension shows that the volume of shares traded
recorded a growth of 31.93 percent. The market recorded 13.892 billion
shares in the two months preceding the extension while the volume of
shares transacted in the two months after the extension rose to 18.328
billion units. The market value also recorded a growth of 16.81 percent
in the review period. As against the value of N147.142 billion recorded
in the two month prior to the extension, shares value now stand at
N171.875 billion in the two months after the extension.
Indigenous investors
Tunde
Oladapo-Dixon, chief executive officer, StockPicks Consulting, a stock
broking firm, said though it is good for the nation to have a foreign
direct investment for some capital projects, “but the capital market
authority should be encouraging indigenous investors who will not take
their monies out in a long time because the market actually is a long
time investment.” Also, the chairman of the Association of Stockbroking
Houses of Nigeria, Ola Yussuff, said that the NSE should focus on
increasing local participation because “it is local investors of every
country that keeps its market alive. As things are now, local
investors’ participation in the market is less than ten percent whereas
in other jurisdictions like in the United Kingdom and America, you have
70 to 80 percent local participation.”
