Good Talk CBN Governor But...!

Dear All,
Do please let us digress a little and look at the latest issue in the Financial circle.
Nigeria now has a new Governor at the Central Bank Of Nigeria (CBN)
His name his Lamido Sanusi ex-MD of First Bank Of Nigerian (FBN) believed to be one of the foremost bank in the nation.

This man was appointed to replace the Dr Charles Soludo aka MEGABANK APOSTLE and it was generally believed that this change of guard was politically and ethnically motivated.

On account of the above at the appointment ratification session in the Senate , he was able to convince majority of the senators and the chronic skeptic citizens that he is a competent replacement for Dr Soludo due to his erudite, sagacious and eloquent responses to enquiries made by the honorable members of the Senate.

One of the quotes from the screening session widely reported by the media in the last 2 weeks goes thus ‘’…….each time I am asked on how the Nigerian Economy has developed, the question I ask is how many Nigerians who were not eating three square meals before now are now eating 3 square meals?’’.

Good talk CBN governor but……….The following posers from the average Nigerian require response from you sir.

Before we continue, what are your comments on the quote above?
Please send in your comments.

Background Info! Goings On With Your Stock 4

Other Marketing Avenues / Foot Soldiers
The number of financial analysts / experts who bombarded our airwaves during the period was legion. Right now you can count the numbers on your fingers. The power of the media was maximized and the experts only insist the market was forever going to be on the rise.

What about our friends and relatives especially our young graduates who were allotted huge targets as such emotions were whipped and we succumbed to the pressure by investing in companies that we would not have invested in order to preserve their employments.

Did you also experience the influence of friends or/and who were had lucky streak in the market and thus overnight became gurus and influenced the investment decisions you took?

Other Investors
Institutional investors especially pension institutions who accumulated portfolios for a raft of reasons like, sentiments, relationships and desperation to invest the suddenly acquired investible funds?

What about the gullible and uninformed (misinformed) general public who joined the bandwagon because they led to perceive this was the in-thing?.

The heralding of new rich (nouveau riche) especially the political class who had so much money to influence the market

Also included above are the industrial captains who had to use all means to retain their hold on their companies by taking up as much stock as they could possibly get.

WHICH CATEGORY DO YOU FALL INTO FROM THE ABOVE?. LET US TALK ABOUT THIS.
continuation

Background Info! Goings On With Your Stock 3

Before we can go ahead please find below the major participants in the market

- Regulatory authorities – Securities & Exchange Commission (SEC) and The Nigerian
Stock Exchange (NSE)

-Interested Parties To The Issues which consists of a raft of different parties including the company Board Of Directors, other professionals like lawyers, external auditors, reporting accountants, issuing houses etc who put themselves on the line by producing a document called The Prospectus which basically tells the history of company, present situation, its future plans and projections (usually for 5 years) and however the proceeds from the Offer will be utilized etc
This document which has an Application Form is used to canvass the general
public to buy into the company

-Other Stock Broking Firms & Banks who served as intermediaries for the distribution & collection of Application Forms for the Offer and receipt of proceeds on behalf of the Issuing Houses and remit same within 2 weeks after the close of the Offer

Other participants will be stated in the next post.

Background Info! Goings On With Your Stock 2

Without being too academic, perhaps the reasons for the above mismatch can de adduced to the following official reasons:

- the per capita income computation is inaccurate as it did not take into account the informal sector of the economy which is quite substantial

-the income strata is skewed i.e. very small percentage of the population control the economy whereas the rest of the people live in abject poverty

- forced savings especially in the formal sector of the economy which mandated
employers of labour to register its staff under the Pensions’ Act of 2004 thus releasing addition funds in institutional investors hands

-increase in country’s revenue leading to high government spending with oil prices rising to the dizzy heights during the period as in the case of the Gulf War period of the early 90’s.

-gains of democracy (have you noticed that the politicians have abandoned that phrase of recent)

- increase in economic development though some other economic watchers have stated that the economy only experienced growth and not development (whatever that means)

Actually the official reasons are inexhaustible, but then these are the ones I can readily recollect right now

Can you come up with additional official reasons? Feel free to come up with these – all of us can do with some additional knowledge...

Background Info- Goings On With Your Stock 1

Dear All,
It is good to know that you re there and ready to be a part of this voyage into the recent past, present and perhaps the envisaged future ( without us trying to play GOD) trends in the financial nay more specifically Nigerian capital market .
It is important to say that we need to set some rules as we journey voyage is as much as possible
- we are not trying to re-invent the wheel here
- we are open to all without regards to race, color, creed, gender, rich, poor, middle class, aristocratic, professional, non-professional, educated , half-educated , illiterates, investors, non-investors, capital market players & watchers etc.
- interactive and participatory,
- open without being malicious
- avoid ‘’big grammar’’ so that it will not leave participants more confused than ever before
- we must avoid dramatics , name calling and accusations
- avenue to share your experiences etc so that we can be better informed in the future
- we are open to criticisms and flaks from each other (both from within & witout)
- etc

Permit me to set the tone by looking at the basic Secondary School Economics theory :
3 Reasons Why People Hold Money
A ) Transaction reasons : i.e. to meet our daily transactions
B ) Precautionary reasons : i.e. to meet un-envisaged eventualities
C ) Speculative reasons : i.e. to meet investments – saving for the rainy day

Volume of money available to meet investment falls under category C and the level which determined by general income level, inflation rate, availability of investment opportunities, eye for the quick bucks and perceived risk level of investments etc.

Now wait a minute if indeed it is true that Nigeria per capita income have always hovered around $500 for decades then ,you & I need to sit back and do a simple mental calculation and conclude that amount of investible funds available for Category C purposes above could not have accounted for the phenomenal leap in activities which took place in the Nigerian Capital Market in 2005 – 2007...

What Happened?

Since 2004, Nigeria has experienced a phenomenal growth in investment(stock and other financial intermediaries), but since the beginning of the third quarter 2008, the story is no more the same. Why this trend?Join me as we take a journey into the goings on before and after in a language everybody can relate with.Catch me on the rebound!