THE decision of JPMorgan Chase & Co. to remove the country from its local-currency emerging market bond indexes would affect the stock market adversely, stakeholders have warned.
This is even as the All Share Index (ASI) yesterday crumbled under heavy sell-offs, dropping by 2.9 per cent to close for the day at 29,454.09 points. Stakeholders be­lieve trading activities were largely driven by panic in the market due to JP Morgan’s announcement.
Specifically, Mr. David Adonri, Chief Executive Officer of High Cap Securities Limited, explained that the decision of JP Morgan would affect the foreign investors’ confidence in the Nigerian capital market.
He said that “a lot of foreign investors have been investing in fixed income and eq­uities market and these investors rely heav­ily on most of the independent rating agen­cies to arrive at investment decisions. What this means is that, with this notification, these investors will withdraw their monies and this will affect the market negatively. An indication was seen on the equities mar­ket today as it fell sharply by over two per cent.”
Adonri, however, stated that the stock market would eventually stabilise if the fi­nancial regulatory authorities could take ap­propriate measures to sustain the economy because when the investors see that Nigeria economy remain strong, they will surely come back to invest. “So, the onus now lies on the regulators’ policies how it affects the economy”, he said.
Kelikume Ikechukwu, an economists and Senior Lecturer, Lagos Business School, in his own opinion corroborated Adonri that the decision JP Morgan will have adverse affect on the stock market and share price will drop further, adding that this, for long term investors, would be good news, but to the economy, it is a bad news.
He stated: “The stock market is a barom­eter to measure the economy. So, when it is recording losses, it sends a signal that there is problem somewhere. In essence, the JP Morgan’s decision is a bad news for the economy.”
Meanwhile, the Nigerian Stock Ex­change (NSE) has announced that it re­corded a 100 per cent compliance rate with the dealing members’ regulatory filing for the second quarter renditions for the period which ended on June 30 2015, which was due on August 17, 2015.
This attainment bodes well with the Ex­change’s implementation of its zero toler­ance policy for infractions as all active deal­ing members of the Exchange are expected to submit their returns within the required timelines.
The Chief Executive Officer (CEO) of the NSE, Mr. Oscar Onyema, said: “the achievement is a reflection of the Ex­change’s collaborative approach to regula­tion, with a strong emphasis on relationship management within an ethical problem solving prism. We believe that this ap­proach is key to developing a strong and sustainable capital market”.