- Political Tension Heating up Capital Market, Says ASHON
The Association of Stockbroking Houses of Nigeria has said the unguarded activities and unrestrained utterances of politicians in the country are heating up the capital market.
ASHON said in a statement that it observed that the political tension was heating up the polity with dire consequences on the economy as a whole and wished to appeal for caution.
It said the uncertainties and insecurities currently in the country were affecting investors’ sentiments, asset valuations, market and country risk profile and portfolio allocation decisions.
It added that in recent times, trading statistics on the securities markets in Nigeria had been reflecting investors’ apathy to unprecedented level of tension, which portended a likely breakdown of law and order in the 2019 general elections.
According to the statement, it is an unassailable investor-behaviour that bad news trigger market panic and investors over-react to such news.
It stated that the country’s economic barometers and the securities markets in Nigeria had continued to reflect investors’ apprehensions to instability in the political and economic landscape through all their indices.
ASHON stated that this had largely accounted for the inability of the market to fully recover from the effects of the 2008 financial crisis, notwithstanding the efforts made by the regulators and operators to fully revive the market.
The association stated that there was a clear and present danger if the trend continued.
The statement read in part, “Our market is bleeding. Foreign portfolio Investors and their indigenous counterparts have embarked on massive sell down of shares and other financial instruments with attendant effect of gross erosion of values despite stellar performances of many listed securities.
ASHON stated, “It has been proved that there is a correlation between the development of the capital market and economic growth and development of any country. As stockbrokers, trained to create wealth and manage investments, we hasten to say that projections cannot be made under the prevailing atmosphere of systematic risk.
“As the current worrisome operating environment that characterises our financial markets deepens, we appeal to the political class to moderate their activities and utterances by acting in such a manner that will engender investors’ confidence in the Nigerian economy and by implication our capital market as the 2019 general elections approached.”
ASHON added it was confident that the on-going downswing on the securities markets would be short -lived as the market fundamentals remained strong.