There is a strong indication that the federal government may summon a meeting of capital market stakeholders over the consistent decline in the stock market.
A combination of factors, such as political risk, currency volatility, and uncertainty in global crude oil prices have affected the stock market performance. The market dipped by 17.4 per cent in 2015 and 21 per cent so far this year.
Although many of the factors affecting the market are outside the control of the stock market operators and regulators, THISDAY checks revealed that the government is planning a stakeholders parley in order to find a solution to the slide. Vice President Yemi Osinbajo is to take charge of the meeting to be supported by the Minister of Finance, Mrs. Kemi Adeosun.
“I can tell you that why there is nothing anybody can do to automatically stop the slide in stock prices, Vice President Osinbajo, who is in charge of the management of the economy and the Finance Minister, Adeosun are planning a meeting with stakeholders. The market needs assurance from the government because of its crucial role in capital formation.
Also, investors in the market need words of assurance and the meeting will help the government to give such an assurance,” a market source told THISDAY on Monday.
It was gathered that apart from the management of the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE), leaders of trade groups in the market will be at the planned meeting.
The stock market has dipped by N2.1 trillion within 11 days of trading in 2016. Apparently worried by the continuous slide, the NSE last Friday activated its Circuit Breaker. The circuit breaker contained in Article 170 under the NSE Rules and Regulations, was approved by the SEC since May 19, 2014 but had not been activated.
However, the continuous decline prompted the NSE to activate the circuit breaker. It provides that the exchange shall halt trading in all stocks and shall not reopen for the time period specified in this Rule if there is a significant (five per cent) market move in either direction.
“For purposes of this Rule, a significant market move means a five move in price of the All Share Index between 10:15a.m. and 13:45p.m. on a trading day as compared to the closing price of the All Share Index for the immediately preceding trading day. If a market move occurs after 10.15 a.m. and any time up to and including 13.45 p.m. the exchange shall halt trading in all stocks for 30 minutes.
The exchange shall not halt trading if a significant market move occurs after 13.45 p.m. The exchange shall halt and reopen trading based on a significant market move only once per trading day,” the rule states.
The circuit breaker stipulates further that “If, following the reopening of trading after a Significant Market move halt, the All Share Index moves further by a minimum of five below its closing value on the immediately preceding trading day, during any trading day the exchange will halt all trading for the remainder of the day. The last traded price in any security prior to the closing of the market shall be deemed the closing price in such security for the day.”