Business
‘Capital Market Needs N500bn Stabilisation Fund’
The Association of Stockbroking House Owners of Nigeria (ASHON), says the capital market needs about N500 billion to bring about stability and boost investor confidence.
The association said that the fund would be a special purpose vehicle to facilitate share purchases and stem the downward slide of share prices.
ASHON said that it believed that the market needed urgent Federal Government’s intervention.
Mr Emeka Madubuike, ASHON Chairman, said in Lagos that such direct intervention by the government would enable the market to stabilise within five years.
Madubuike said that such stabilisation fund, contrary to some other opinions, would have multiplier effects of boosting liquidity in the market.
According to him, the capital market may not witness any growth and stability without direct intervention of the government through the Asset Management Corporation of Nigeria (AMCON).
He said that the issue of stabilisation fund had been misconstrued because of the gap between the capital market regulators and officials of the Ministry of Finance.
“If we have somebody who has been in the system for long, the stabilisation fund will have been a thing of the past as this needs a lot of engagement at the highest level,” Madubuike said.
He said that there was the need for strong link with somebody that understood the dynamism of the capital market in emerging economies.
Madubuike said that the association would continue to push for the stabilisation fund, stressing that it would be the only solution for market rebound.
He said also that various changes in the management of the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) contributed to the market downturn and erosion of investor confidence.
The association chairman advised that Nigeria should borrow a leaf from some emerging economies that used such funds to cushion effects of global financial meltdown on their markets.
Madubuike said that some Pension Fund Administrators (PFAs) and foreign investors had moved to safer investment havens because of the sustained downward trend of the market.
He said that the investment of the PFAs on the Nigerian Stock Exchange was less than 10 per cent of the market size.
The chairman advised government to assist the organised private sector in restoring the past glory to the market.