Business
Market Operators Call For Margin Loans’ Absorption
Some capital market operators on Thursday said the Federal Government’s intervention in the financial sector could only be effective if the contentious issue of margin loans was addressed.
Margin loans are loans taken by investors to buy stocks in the capital market. The loans are taken to take advantage of a prevailing situation to position themselves in the market.
Some of the loans have gone bad because of the crisis on the Nigerian Stock Exchange which has led to slide of stock prices.
The market operators said in separate interview in Lagos that the outstanding margin loans should be absorbed by the Assets Management Corporation of Nigeria (AMCON) to ensure more liquidity in the market.
Alhaji Rasheed Yussuf, the Chairman of Association of Stock Broking Houses of Nigeria, suggested that the Federal Ministry of Finance should support AMCON to address the issue of margin loans.
He advised that government should consider margins loans as the non-performing loans of banks that were absorbed by AMCON.
He said that absorption of margins loans by AMCON would provide more liquidity to the market since prices of equities would never appreciate without adequate liquidity in the market.
Mr Oladipo Aina, the Chief Executive Officer of Signet Securities Ltd., said that the market capitalisation of the Nigerian Stock Exchange was affected by the de-listing of shares of some of the troubled banks.
Aina said that the capital market, being the barometer of the economy, needed government’s intervention.
He said that the operators would review their position papers for the Federal Government to accommodate opinions of other stakeholders on the way forward.
Aina said that the government’s intervention in the financial sector was only being felt in the banking sector and advised that the gesture should be extended to the capital market.
He said that investors’ expectations were high when AMCON was established..
Aina said that investors should be educated on the rudiments of the market, adding that investment in the capital market should be for long-term because of the domination by the equity sector.
He said that it would take the market a long time to get back to the boom of the pre-crisis era.
The Chief Executive Officer, APT Securities and Funds Ltd., Malam Garba Kurfi said that the impact of activities of AMCON in the financial sector had not been felt in the capital market as it had remained bearish.
“I do not see much impact of the bail-out in the market, except in the bonds market,” Kurfi said.
We recall that AMCON recently said it would stop absorbing banks’ bad loans from Oct. 31 and that by then it would have acquired N2.78 trillion face value of non-performing loans from 21 banks at the cost of N1.16 trillion.
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.