Capital market experts at the weekend renewed the call for multinationals in the telecoms, and oil and gas companies to list on the nation’s bourse, to deepen the market and encourage active participation of indigenous consumers in the companies’ wealth creation process.
The stakeholders argued that for the nation’s bourse to sustain price appreciation, it must witness a reasonable level of liquidity, more than what is currently available in the market.
According to them, the listing of multinationals and telecommunication firms’ at the capital market would ultimately boost liquidity and sustain its growth.
Indeed, economists have argued that compelling big corporations in niche sectors of the Nigerian economy, especially the telecommunications, and petroleum sectors to list on the Exchange will significantly raise market capitalisation, currently estimated at slightly above N10trillion.
However, sectorial analysis of the market shows that the telecommunication sector is under-represented, as none of the major telecom firms’ shares are traded on the Nigerian Stock Exchange (NSE).
Since 2012, the NSE has made efforts to roll out initiatives that will compel multinational firms to list on the bourse, and had even gone ahead to review its listing rules, to make it easier for companies to access the capital market and trade their shares.
NSE had also provided legislation that covers incentives, unbundling of stringent eligibility requirements that create high barriers for potential entrants, and hinder participation by willing businesses, adopting options that promote foreign investment in the economy under terms that support national interest without exposing the market to the dangers.
There is no gainsaying the fact that the listings of these telecom giants would ultimately shore up the liquidity of Nigerian capital market, which will in turn restore the much-needed investors’ confidence.
Specifically, the Managing Director, Crane Securities Limited, Mike Ezeh, said the market is currently shallow in terms of tradable equities available on the bourse, saying the entry of these multinationals will make more shares available for trading, and ultimately deepen the market and improve liquidity.
“The market is shallow in terms of available equities trading. The underrepresentation of these sectors is holding back growth in the market.”
The Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, noted that for the Exchange to become a world class one, the NSE must continue to develop the market in such a way that it would enable companies to embark on cross boarder listing.
He regretted that “Today, we don’t have any company that is privately listed outside the country that is listed in Nigeria but our companies are going to list outside. We are only seeing cross boarder listing.”
An independent investor, Amaechi Egbo, noted that the major inhibiting multinationals from the market, and prevents new ones from being listed is the pricing mechanism.
He pointed out that the pricing mechanism on the NSE had become weakened in the last three years, with many stocks becoming so undervalued that they could no longer reflect the intrinsic worth.
“For such companies that are international institutions, when they value their investment in Nigeria, the market value seems to be lower than the intrinsic worth of those companies. So the market should correct this because other exchanges have done so, and then we should have transparent and easy to enforce listing and post listing rules,” he added.