An expert in the workings of the Nigerian stock market has attributed the weak pricing mechanism as a major factor that compels multinational companies to exit from the nation’s equity market and inhibits new ones from being listed.
The chief executive officer of Cowry Asset Management, Mr. Johnson Chukwu, who stated this recently at a forum in Lagos, said that the pricing mechanism of the NSE had become so weak in the last three years, resulting in most stocks becoming under- valued and could no longer reflect their intrinsic worth.
“For such companies that are international institutions, when they value their investments in Nigeria, the market value seems to be lower than the intrinsic worth of those companies.
So the market should correct it because other Exchanges have corrected theirs and then we should have transparent and easy to enforce listing and post-listing rules,” Chukwu said.
Chukwu, who disagreed with the notion that the de-listing of the Nigerian Bottling Company (NBC) from the NSE would set a bad precedence for other multinationals said, “each issuer or company has its own corporate strategy.
“Now NBC wants to remain a private limited liability company, they may have several reasons for that, but that will not affect what happens to Nestle or Cadbury, the key thing is for us to continue to develop our market to accommodate cross border listing,” he said.
Chukwu called on the NSE to review the current listing and post-listing requirements and create a mechanism that would allow free entry of new companies into the Exchange and free exit of existing ones.
He added that there was need to also create incentives that would attract companies to be listed on the NSE.
He lamented that no company privately listed outside the country was currently listed in the NSE whereas Nigerian companies have been listing in other Exchanges of the world.
“Today, we don’t have any company that is privately listed outside the country that is listed in Nigeria, but our companies are going to list outside. We are only witnessing cross border listing.
“Oando wants to list in South Africa because of the benefits of listing in South Africa. We should develop our market in such a way that even foreign companies would have the need to be listed on our local market,” he said.
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