Economy
Technology has Restored Confidence in Nigerian Capital Market—Stockbroker
By Dipo Olowookere
When investors do not have confidence in a country’s capital market, then there is a big danger because the market segment is one of the lifelines of any economy.
In order not to put the Nigerian economy in crisis, the Nigerian Stock Exchange (NSE), under the leadership of Mr Oscar Onyema, has come up with different initiatives.
One of these is the use of technology to run a transparent stock exchange, which has been commended by stakeholders in the industry.
At the moment, it is difficult for stockbrokers to trade shares of clients without first getting the approval of the owner.
In an interview with Vanguard, a Stockbroker and Chief Relationship Officer with Foresight Securities & Investment Limited, Mr Charles Fakrogha, said the use of technology by the NSE has helped to restore confidence investors have in the country’s capital market.
According to him, technology has allowed stockbrokers give their clients codes so as to validate trade orders.
He said this smart trading allow customers use their smart phone to trade anywhere in the world, explaining that it means they can put in their order, but before those trading orders will get to the trading engine, the stockbroker who gave the client the access must have validated the order. So, it is also making business easy for the capital market.
“Operators can now reach as many of their clients as possible unlike before when they have to manually put in the order.
“So, technology has done a lot in terms of enhancing the market. At the same time, it also has a flip side. Technology has also posed problem in terms of hacking, in terms of cyber-crime, but the measures put in place by the information technology department of the stock exchange and constant training and re-training of operators, to ensure that their system is fire proof, has helped in plugging the leakages.”
Furthermore, Mr Fakrogha said, “All the stockbroking firms have enhanced their Information Technology (IT) capability; most firms now trade remote. Most firms now have what is called Order Management System (OMS), where clients can put in their orders from any part of the world and those orders will get to the trading engine of the stock exchange, of course, validated by the trader before they get to the trading engine.”
Commenting on capital market infractions, the renowned stockbroker said, “Infraction has nothing to do with technology; it is integrity. However, technology has a role to play. There is a system at the Central Securities Clearing System (CSCS) initiated by the stock exchange.
“If I buy or sell for a client, the client gets automatic alert. That is what is called Trade Alert. If I as a stockbroker, I buy or sell for a client, he/she receives trade alert on his/her phone. So, if the client sees a trade on his portfolio that a broker has sold and did not give the mandate.
“Of course, it is obviously, an unauthorized sale. It is left for the client to report the transaction to the appropriate authorities. If the client did not do anything, of course, the stock exchange will not know.
“So, when a client is opening their trading account, they must insist that they will like to have a trade alert. The trade alert is now made compulsory. As soon as a client fills the form and you send it to the CSCS, automatically, the investor will be on trade alert.
“It is a very good innovation and it has been on for a long time. So, when the unauthorized sale takes place, the investors can make a report and where the broker cannot give reasonable explanation, the investor can take it up at the level of the Nigerian Stock Exchange and the problem will be resolved.
“As for me, I think technology has played a major role in terms of checking unauthorized sale, unlike in the past when a broker will sell and the client will not get any notice until one or two years after.”
On the direct cash payment to customers introduced by regulators, Mr Fakrogha said, “With direct cash settlement, if I sell shares for a client, all the proceeds will not come to my account. It is only my commission that comes to me while the proceeds go to the client.
“For us, that is a major breakthrough in terms of technology. This has come to also eliminate market infraction and this is major breakthrough on how technology has assisted to bring sanity in the capital market. It will interest you to know that Foresight is one of the stockbroking firms at the forefront of implementing the stock exchange’s direct cash settlement initiative.”
By Dipo Olowookere
A 1.08 per cent growth was further printed by the Nigerian Exchange (NGX) Limited on Friday on improved appetite for Nigerian stocks.
Data showed that the insurance sector lost 0.61 per cent yesterday due to profit-taking as the energy space gave up 0.08 per cent, while the commodity counter closed flat.
However, the industrial goods landscape appreciated by 2.06 per cent, the banking index improved by 1.31 per cent, and the consumer goods sector expanded by 0.83 per cent.
At the close of business on Customs Street, the All-Share Index (ASI) increased by 1,563.92 points to 147,040.07 points from 145,476.15 points and the market capitalisation went up by N996 billion to N93.722 trillion from N92.726 trillion.
UAC Nigeria led the advancers’ log yesterday after it grew by 10.00 per cent to N96.80, Transcorp Hotels jumped by 9.71 per cent to N172.80, Royal Exchange appreciated by 8.89 per cent to N1.96, Ikeja Hotel soared by 8.74 per cent to N31.10, and Veritas Kapital leapt by 8.07 per cent to N1.74.
On the flip side, Union Dicon declined by 10.00 per cent to N6.30, ABC Transport slipped by 9.88 per cent to N3.10, AXA Mansard depreciated by 7.19 per cent to N12.90, FTN Cocoa lost 4.62 per cent to trade at N4.75, and Guinea Insurance dropped 3.36 per cent to finish at N1.15.
A total of 38 stocks ended on the gainers’ table and 17 stocks finished on the losers’ table, representing a positive market breadth index and strong investor sentiment.
Traders transacted 361.6 million equities for N14.8 billion in 21,051 deals yesterday versus the 1.9 billion equities worth N19.2 billion traded in 23,369 deals a day earlier, showing a decline in the trading volume, value, and number of deals by 80.97 per cent, 22.92 per cent, and 14.20 per cent, respectively.
The busiest stock for the session was Zenith Bank with 59.5 million units worth N3.6 billion, Access Holdings traded 46.1 million units valued at N973.0 million, Fidelity Bank exchanged 29.4 million units for N560.4 million, FCMB transacted 27.9 million units worth N293.9 million, and Tantalizers sold 13.0 million units valued at N29.8 million.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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