Share prices respond to FG’s intervention

Friday Ekeoba, Lagos - 28.08.2008

INVESTORS in the nation’s capital market on Wednesday heaved a sigh of relief as the market, after months of downturn, recorded 22,988.72 basis points or 34.63 per cent and N3.832 trillion in its All-Share-Index and market capitalisation.

The market, between March 5 and August 26, had recorded a huge slide until the Nigerian Stock Exchange got a much needed elixir midweek, when a new rule on price movement came into operation following Federal Government’s intervention.

Speaking on the government intervention, Chidi Agbapu, a stockbroker and chief executive officer of Emerging Capital Limited, described the measure as “a short-term therapy,” adding that it was one of the resolutions at a meeting on Tuesday in Abuja between officials of the Federal Ministry of Finance, led by the Minister, Dr. Shamsuddeen Usman, the Central Bank of Nigeria, the NSE, led by its director-general, and the chief executive of banks, among others.

The effect of the new rule became evident at the end of yesterday’s trading, as capitalisation recovered N280.03 billion, while the index closed 1,393.38 points or 3.19 per cent better, after 74 and 14 stocks occupied the gainers’ and losers’ sides respectively unlike the situation in the previous weeks.

The size of the rebound was also helped by the high number of blue-chips, most of which are on the table of top 20 biggest stocks, including most of the banks that have hit their, sometimes three-year low, as at Tuesday.

Meanwhile, the Director General of the Nigerian Stock Exchange (NSE), Dr. (Mrs) Ndi Okereke-Onyiuke, on Wednesday said that market recovery would be gradual.

She said that investors should not expect quicker roll-over of the market following government’s and stakeholders’ intervention which suggested measures aimed at arresting the prevailing market melt down.

She stated that the fundamentals of the market were still very strong, saying that what caused the crash of prices in the market were alien policies.

Allaying the fears of a possible complete takeover of the capital market, the Director-General explained that everywhere in the world, government intervened in a critical period but this did not mean that they planned to take over the market.

“The market is 100 per cent independent, but regulated by the government,” she added.