Source: All Africa.com, Bonny AmadiJan 18, 2010

In her recent review of capital market performance in 2009, the Director General, Prof. Ndi Okereke Onyiuke disclosed that the Exchange considered and approved 30 applications for new issues valued at N279.25billion or 1.2 percent of GDP, as against 70 applications for new issues valued at N2.6 trillion or 11.3 percent of GDP in 2008.

On primary market’s vibrancy, Prof. Onyiuke said; “When compared with the preceding five years, the Primary market was less active during 2009, in terms of number of applications received and issues offered for public subscription. This can be attributed to the liquidity crisis and the overriding pessimism of investors”

Onyiuke, who said that the stock market indicators recorded downward movements, added that a significant portion of the funds that left the market for the Private Placement Market in 2007/8 remained locked-in, because many of the issuers have not yet applied to the Exchange for listing.

She disclosed that the bulk of the transactions were in equities, which accounted for N685.3 trillion or 99.94 percent of the turnover value compared to N2.376 trillion or 99.85 percent recorded in 2008.

These facts presented by the DG sources said may make it possible for the capital market regulators not to approve any new IPOs in 2009, unlike in 2008 when N1.01 trillion was raised through IPO. This was even as 2007 witnessed quite a number of ‘big ticket’ Public Offerings.

During the period, funds were raised in the primary market window of the stock market through Rights Issues, Initial Public Offerings, and Offers for Subscription, Private Placements and GDRs.

Daily Champion notes that the vibrancy of any market is normally measured by how enthusiastic new issues are embraced by investors. In 2009 the erosion of investors’ interest in the market occasioned by many alleged insider dealings, inadequate regulation as well as policy inconsistency forced many investors out of equity business to other forms of investments where they hoped to actualize their investments objectives.

In 2009, activities in the primary market was grounded, even as secondary market offers were few in number based on the understanding that such offers would not be welcomed by the market as they feared that it would be under subscribed. During the period, most newly approved issues listed by way of introduction had their prices dropped by over 50 percent, which showed investors resentment to equities trading. The challenge therefore remains how investors can embrace new issues this that capital market stakeholders are toiling to restore sanity to the market?

In 2009 for instance, the market did not carry out any Initial public offer (IPO) or offer for subscription. However, equities of 14 companies were listed by introduction. This remains a far cry from approved new issues in 2008 during which N608 billion was raised by the market through Initial Public Offering (IPO) as well as supplementary issues.

An investor who spoke to Daily Champion on the prospects for new offers in the market expressed worry that it may take long before the market will regain its lost vibrancy.

“When the share prices were going down, the brokers keep telling us that this is the best time to buy, we bought and the prices crashed further. Everybody is now afraid of buying, even at per value. I have moved to real estate business, that is where I am sure that I would get return on my investments,” the investor who would not want his name published, said.

The primary market remained active in 2008 until the last quarter of the year. While a lot is being said about market’s early recovery, which comes with restoration of investor’s confidence, the demonstration of investors’ acceptance of all assurances that sanity has returned to the system would be determined by smooth sail of the new issues that would storm the market this first quarter.

Further analysis of new issues approved in 2008 indicates that the sum of N608 billion was raised through Initial Public Offerings (IPO) and supplementary issues, while N376.51 billion was raised through rights issues. This reflected a continuous decline from 2008 figure which stood at 301, from 309 recorded in 2007. However Equities listed on the NSE in 2009 dropped from 299 to 266,

.No new IPOs were approved in 2009 compared to N1.01 trillion raised in 2008, while N14.7 billion was raised through supplementary issues, N31.72 billion through rights issues, and N71.74 billion through bonds issue, including four State Government Bonds.

Offers that made year 2007, include First Bank’s N100 billion offer, Afribank N100 billion, Bank PHB N85billion, Access Bank(N70.4billion, FCMB’s N63 billion, Oceanic Bank’s N55.4 billion, UBA’s N53.8 billion and Fidelity Bank’s N50billion, including other non banks offers.

NSE in 2007 recorded 22 offers for subscription, seven Hybrid offers, 14 private placements, 20 Right Issues and five initial public offers among others Leader of Progressive Shareholders Association, Mr. Boniface Okezie said that the market has become more challenging that only company’s performance can ginger investors to participate in buying its shares in the secondary market.

Speaking on the primary market, he said time is not ripe for new issues because of investors’ dampened interest. He however said that while some investors are afraid of taking risk, others are taking advantage of the low interest in the market to take advantage of new opportunities and this he said would favor new issues offers that may soon be floated.

Okezie disclosed that the problem was that the regulators could not protect investors during the offer boom as the share prices of the companies in offer were grossly over valued

Daily Champion learnt that investors that participated in the offers of 2007 and 2008 have expressed worry that the offers were at high prices as no amount of leveraging could bring their holdings to advantaged position in the nearest future.

This believe it was gathered has made investors to keep away from public offers, offers for subscription, right issues among others, as this trend characterized the market in 2009.

Nigerian Bank Nigeria Access Bank Plc, Afribank Nigeria Plc, Bank PHB Plc, Fidelity Bank Plc, First Bank of Nigeria Plc, Nigeria Stock Exchange, Oceanic Bank International Plc