Some operators in the nation’s equity market have linked the persistent capital market depression to the exit of some foreign investors following the rising wave of insecurity in the country.
While urging the federal government to be more apt and proactive in handling the menace, they noted that most investors were currently exiting the nation’s capital market to other emerging markets on the continent due to the growing security challenge in the country, hence posing a serious threat to efforts put in place so far by the regulators to attract foreign direct investments.
They argued that the few foreign investors that have decided to play in the Nigerian stock market after the exit of their counterparts were currently offloading their shares due to fear of losing their portfolio.
The Managing Director, Lamberth Securities Limited, Mr. David Adonri, speaking to LEADERSHIP at the weekend, said that globalisation and liberalisation had made free flow of investment of capital across national borders possible with ease, but however affirmed that if the government failed to decisively confront violent extremism in Nigeria, efforts at attracting foreign investment may be a mirage.
“Vibrancy of the capital market is conditional on the investment climate in every country. Where insecurity persists, the investment climate will not be conducive. Because peace and progress are intertwined, investment has tendency to always migrate to secure environments where peace is assured.
“Violence kills people and destroys assets. Therefore, no sane investor will risk his hard earned savings in a strife torn economic environment. This is behind the recent exodus of foreign portfolio investment from our capital market in the wake of deteriorating security situation in Nigeria.
“ Globalisation and liberalisation of capital markets has made free flow of investment capital across national borders possible with ease. Frightened domestic investors can move their investments to conducive foreign markets thus compounding the woes of the capital market. Also, such capital flight can exacerbate the pressure on the domestic currency,” Adonri said.
The Managing Director, First Atlantic Securities Limited, Mr. Samuel Olayemi, in the same vein lamented the inability of government to find a lasting solution to the high rate of insecurity in the country.
He noted that the state of insecurity in the country was having a multiplier effect on the stock market, adding that it was a contributory factor to the unprecedented lull witnessed in the market presently.
“It instills instability in the market. It is putting fear in the mind of everybody and scares foreign investors from us. To a large extent, it is having serious effect on the market.”