Stakeholders seek fiscal incentives, policy harmonisation to stimulate recovery

By Helen Oji

Investors fortune plunges by N628 billion in Q1

Worried by the N628 billion loss suffered by equity investors in the first quarter (Q1), market players

have urged the Federal Government to adopt policies that would address the current macroeconomic challenges and stimulate recovery. 

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The stakeholders, who lamented the low investors’ patronage in the stock market despite current cheap prices, in separate interviews with The Guardian, blamed the current illiquidity and low investment appetite for stocks on unfavorable government policies.
   
According to them, foreign portfolio investment drivers have continued to stay on the sideline due to the poor state of the capital market, while the fewer investors that are around put the money in the money market.
   
Indeed, the stock market had witnessed a prolonged downturn due to a weak macroeconomic situation. For instance, the Nigerian Stock Exchange (NSE) suffered a seventh consecutive decline at the end of transactions on March 20, 2021.

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Also, at the end of the first quarter of 2021, investors’ wealth depreciated by N628 billion. The market capitalisation, which stood at N21,056 trillion as of January 4, 2021, when the market opened for the year slumped by N628 trillion or three per cent to N20,428 trillion yesterday. 
  
Also, the All-share index shed 1,182 points or 3.0 per cent from 40,227.72 to 39,045.13
 
The stakeholders insisted that addressing Nigeria’s security challenges and economic instability would guarantee a busier investment market and boost confidence among domestic and foreign investors.
  
The Publicity Secretary of Independent Shareholders Association, Moses Igbrude, said listed firms must continue to record impressive results and good dividends to sustain the gradual recovery.
  
He, however, pointed out that the operating environment must be stable and conducive for businesses to thrive and for quoted companies to perform optimally.
  
He said: “Companies must continue to declare impressive returns and pay dividends consistently to shareholders. Government must support the stock market through good regulations and ensure a stable macroeconomic environment that will accelerate growth with a multiplier effect on the stock market.”
   
The President of New Dimension Shareholders of Nigeria, Patrick Ajudua, said the economy must witness some reasonable level of improvement to sustain the uptrend. 
He urged the regulators to avoid pronouncements that may likely reverse the trend.
  
An independent investor, Amaechi Egbo, charged the government to review the tax system and reduce excessive charges to encourage more investment inflow into the market. He argued that one of the major reasons many companies, multinationals and domestic alike, shun listing on the bourse is to avoid excessive taxes and other policies that would affect profitability.
   
“They must begin to look for a tax cut regime to curb the challenge. Those who deserve tax holidays and incentives must be given. Also, over-regulation of the market must be curtailed. The Financial Reporting Council of Nigeria (FRCN) is going about reeling out rules whereas it is not SEC saddled with the responsibility of regulating the capital markets,” he lamented.
  
He argued that more investors would be attracted to the market if the government streamlines policies, especially as they apply to taxation.