Market operators at the Nigerian Stock Exchange (NSE) have said that the newly signed Asset Management Corporation of Nigeria (AMCON) Bill is expected to stabilise the wobbly stockmarket performance.
Bola Oke, a finance analyst at Wealth Zone Limited, an investment firm, said with the establishment of the "long awaited bill", investment activities at the nation's capital market "will see significant improvement", especially in the banking sector for which the bill was drafted.
Ms. Oke said, "The success of the corporation, once it becomes fully operational, will impart positively on the investing public because banks will no longer hoard money. I believe people should be able to approach their banks for loans to do business again."
Egbo Amaechi, an executive member of the Shareholders Association of Nigeria, said the AMCON "will help to improve confidence at the NSE, since the company is structured to mop up the incurred toxic assets and set a lot of capital market operators free."
More information
However, Gbenga Idowu, managing director of the Centre for Shareholders' Enlightenment Limited, a centre dedicated to investors training, said investors need more information on the operation of the new corporation.
Mr. Idowu said with the establishment of a company to manage banks' bad loans, "it is still expected that the AMCON should be run as a profit concern organisation."
Olufemi Awoyemi, managing director and chief executive officer of Proshare Nigeria Limited, an investment advisory firm, had also said that the AMCON represents one of the solutions needed to address the economic condition in which the market is operating and not ‘the solution.'
According to him, a greater component of the solution required will have to come from the harmonisation of the fiscal and monetary policies the Nigerian economy is in dire need of.
Marginal improvement
Meanwhile, at the close of trading session on Tuesday, the NSE measuring parameters - the All-Share Index and the market capitalisation - recorded marginal gains.
The NSE All-Share Index went up marginally by 8 units, closing at 24,784.85 basis points from the 24,766.14 on Monday. Market capitalisation also moved in the same direction, closing at N6.1trillion, as a total of 268.4 million shares valued at N2.4 billon were traded.
Activities in the banking sub-sector saw majority of the stocks trade on the upside.
However, Guarantee Trust Bank, First City Monument Bank, First Bank, and Zenith Bank succumbed to trading pressure, shedding between 10 kobo and 73 kobo.
Analysts at Afrinvest Limited, a stock broking firm, in a report, said, "The bill will bear heavily on the outlook of the equity market and the Nigerian economy at large. We believe that a certain level of confidence will be restored in the Nigerian financial system following this new development.
"The commencement of operations by AMCON will provide the basis for any meaningful merger and acquisition talks and the eventual re-consolidation of the Nigerian banking sector, going into the third quarter of the year," they added.
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