The Nigerian Stock Exchange (NSE) has announced today a series of transparency initiatives aimed at increasing investor confidence.
These amount to no more than dressing up a pig by putting lipstick on it.
The reality is that the stock market is a hive of insider dealing and market manipulation by the owners of companies.
These transparency initiatives provide no more than a thin veil of credibility to a clearly inefficient and controlled market.
As stated many times previously, Naira Insider knows of many cases of corporate accounts and reporting manipulation.
This in itself provides no credibility for the market that is supposed to provide accurate and up to date information on the performance of floated companies to current and prospective shareholders.
All those involved in companies and finance in Nigeria know the game and it’s rules.
None these people would dream of investing in the shares of quoted companies without inside knowledge of what was going to occur in the future or a market manipulation strategy involving collusion.
Anyone else is just playing with knives.
The NSE is currently in an extended bull run.
The is no fundamental analysis that supports this gain in value.
Normally a weaker currency will make domestic shares more attractive to foreign buyers, however in this case, international investors are (rightly) staying well clear.
This begs the question; Who is driving up the market? There is only one likely culprit…. domestic institutions.
Starved of sources of revenue and capital, the banks are bidding up the values of companies in order to sure up their capital position to enhance their balance sheets and drive capital performance.
This has happened in many places around the world when growth stagnates and financial institutions need to perform.
All that is needed is a relatively liquid market of assets.
Examples include Iceland with company values and Ireland with property.
The NSE management need to look hard at their performance and integrity over the last 5 years.
Nothing they have done has improved the efficiency or transparency in the market.