With the take-off of the exchange-traded derivatives (ETD) market, retail investors have called for more investment in the capital market to enhance economic growth.
Besides, they have called for incentives to create sufficient local capacity and counter the effects of fleeing foreign portfolio holders.
ETD market, a new asset class, is expected to provide local and foreign investors new opportunities to hedge against market risks in Nigeria.
It is also expected to complement existing asset classes, provide investors and other market players with the necessary tools for tactical asset allocation, as well as improve risk and cost management for effective portfolio management.
President, Issuers and Investors Alternative Dispute Resolution Initiative (IIDRI), Moses Igbude, advised retail investors to deepen their investment and exploit the emerging opportunities in the nation’s bourse at the moment, especially with the creation of the new derivatives platform to invest and diversify portfolio base.
While canvassing for increased investment in the stock market, alongside other key shareholders, he pointed out that government can empower the retail investors by providing some form of incentives.
Igbrude insisted that the provision of incentives for retail investors would help restore confidence and boost their patronage in the market. He argued that the lull witnessed in the market in the past few years was partly due to the exit of foreign investors, who have created instability in the market.
According to him, local investors were the most affected by the 2008 financial meltdown; hence, they need fresh motivation to return fully to the market.
He pointed out that depending on foreign investors to deepen the local bourse is a wrong approach to growing an institution often described as a “barometer used in measuring an economy”. Igbrude also urged the government and other stakeholders to step up investors’ campaigns on the benefits of investing in the capital market.
President of the NewDinension Shareholders Association, Patrick Ajudua, said there is a need for retail investors to deepen their investment in the market with the creation of new derivatives platform.
According to him, the platform would provide for more price discovery and risk transfer of securities for investors in an era of economic uncertainties and difficulties.
“The effect of dwelling fortune from stock occasioned by high global oil price has made it imperative for local retail investors to embrace the derivative market,” he said.
Ajudua suggested that government should encourage retail investors by removing a tax on investment returns, as well as providing a secured and stable environment to boost yields.
Also speaking, the President of Proactive Shareholders Association, Taiwo Oderinder, said: “There is a need for retail investors to deepen their investment in the capital market to maximise the benefits of the newly created derivative market.
“Failure to do it will be to the advantage of portfolio Investors. To me, the main encouragement we need is education on both the derivatives products and how to play the market.”
The Nigerian Exchange Limited (NGX) last week announced the formal take-off of first West Africa’s first Exchange Traded Derivatives (ETD) market, a new asset class expected to provide local and foreign investors new opportunities to hedge against market risks in Nigeria for eight years after its proposal by stakeholders.
Chief Executive Officer (CEO), NGX, Temi Popoola, said the platform will play an essential role in broadening and deepening the market, thereby adding new impetus to NGX’s leading position as Africa’s preferred exchange hub.
