That the Nigerian Capital market has been bullish over the past few years has not been in doubt, even the most sardonic of global institutions and observers have attested to the paranormal performance and wealth created on our nation's capital market.
The question that has kept recurring has been for how long will this continue? Is it sustainable? Are the good times really here? Have I missed out? Can I still cash in on the good times?....multitudes of questions been expressed in our various mother tongues. It is quite understandable that with the years of economic torture Nigerians have gone through, people want to be sure that someone, somewhere and somehow is not pulling imaginary strings in the market just to heighten their appetite in preparation for an eventual doomsday!
A reality of life (and not necessarily a sad one!) is that things happen in cycles, what goes up, they say "must" surely come down and indeed this has been found to be true of business cycles - of which our capital market is not immune to. Quite a lot of people have expressed fears and concerns about the sustainability of the upward swing of the Nigerian stock market. Some argue from the point of business and economic fundamentals; again and again, it is said how much confidence can we put in the figures reported by companies. Other argument stems from the rather bizarre non-correlation between stock prices of some companies and below par performance of the quoted companies - they just seem to move in opposite direction! Not to worry, I read Economics (and love it!), and have come to understand that the Nigerian culture and environment has a rather sophisticated way of responding to the "fundamental" laws of Adam Smith and Marx' ( I haven't exactly said we don't respond to the economic laws...so read my lips!).
While I do not intend to totally discount the claims and concerns of commentators/stakeholders (most more qualified than I am) about the fragile nature of the nation's stock market, I do not agree that we are teetering on the edge of doomsday. Oh yes, indeed there's some great imbalance in the market, with just one sector accounting for over 50% of the entire market capitalisation, it does raises some points for discussion. However, I'll choose not to discuss from a stance of trepidation...I see an opportunity...not only from an individual perspective, but from a national level as well. Let it be said, that the very sector that now accounts for such a great imbalance, some scanty years ago, accounted for less than 5% of the total market capitalisation. So what has happened...quite simple, a Daniel came to the scene for that sector and charted a clear vision and direction, of which all the participants were whipped into line and focus. Our earnest desire is that as the economic reformation drama of the country continues to unfold, the next scenes and actors will help shape clear direction and focus for other sectors that have lagged behind...I see that happening!
When we measure the depth of our capital market, using the market capitalisation as a percentage measure of our GDP, it is indeed obvious how much more distance we still have to cover. The percentage ratio as at 2005 figures is put at 25%; compare this with other stock exchanges' market capitalisation as a percentage of their country's' GDP like JSE (220%), London (145%), Singapore (220%), Spain (90%), Malaysia (138%) and Bombay (90%) and the gulf is obvious (my friend calls it a depressing statistic of which the scale of the graph has to be seriously tweaked for Nigeria to appear on a comparison chart!).
But wait a minute, what do you see? I see a massive opportunity for you and I as we play in this market. Let's assume that GDP growth for the country remains stagnant, the mere growth opportunity for the stock market to catch up with the GDP of the country leaves enough mouth watering opportunities for investors like you and I. But the truth is that we are a growing economy, projected to grow our GDP at an average of 5%, considering the base point we are coming from, I strongly believe the Nigerian capital market irrespective of any sector that dominates it, is here for a very long run - sorry to disappoint the haters...no meltdown in sight!
But what if...just in case the threat of meltdown is real...then you need to understand that "opportunities" do not disappear during meltdown (I'll spare you the economics of progress during meltdowns, but just to mention, all the countries who suffered Stock Market depression at one point or the other, are still the World's leaders!)...they become better enhanced... So my friend, stop bothering about "market" failure...there's value to be created in this economy...money to be made...and a nation to be built - Selah!
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