ASHON blames continuous stock market crises on trust deficit
On May 18, 2012 · In Business
BY NKIRUKA NNOROM
The President of Association of Stockbroking Houses of Nigeria (ASHON), Mr. Emeka Mmadubuike, has said that low participation arising from lack of trust still constitute a major snag to the revival of the capital market.
Mmadubuike who made the assertion in a chat with Vanguard, in Lagos, averred that a situation where those that have in one way or the other contributed to the downfall of capital market go unpunished is sending wrong signal to the investing public, alleging that this development has kept the market on its knees since 2008.
He observed that knowledge base of participants in the capital market is key in determining their level of participation as well as their understanding of some key initiatives of the regulators being undertaken to turn around the market.
He said, “One of the things that fuel distrust among micro-investors is that nobody is held responsible for misdeeds in the market. If people know that there is a process in place that ensures that anybody that commits any form of infraction is punished, it will improve their trust level.
If people know that there is also a process in place that ensures that they will recoup part of their loses in event of similar crash that took place in 2008, and those that led them to that path will be punished, it will also improve their trust.”
According to him, the number of locals taking part in day-to-day running of the market is as important as the integrity of operators.
“Most markets we want to benchmark ourselves with have large number of their local investors participating in the market. In Nigerian Stock Exchange, we have less than one million Nigerians that are actively involved in the market. The regulators should continue to build on investors’ education with a view to increasing local investors’ participation in the market,” he stressed.
He opined that developing of more products do not hold the solution to the lingering stock market crises, saying, “the more sophisticated a product gets, the more investors loose confidence and trust in it.”
The ASHON boss maintained that efforts should be concentrated in deepening the existing products, rather than multiplying them.