The capital market saw some significant recovery on Wednesday; just hours after the Federal Government announced wide-ranging measures directed at ending the prolonged bear run that had resulted in investor losses estimated at N3.5tn in the past five months.
The All Share Index gained 1,373.38 points or 3.18 per cent to close at 44,572.85 points on Wednesday, compared with a 0.4 per cent slide a day previous.
The total market capitalisation of the 319 listed equities also rose by 3.18 per cent or N32bn to stand at N9.089tn almost cancelling Tuesday?s N37bn loss.
Trading volumes also rose by 162 per cent over the previous day?s figures as confidence returned to the market where stocks from virtually all the sectors had taken a beating in recent weeks.
After a meeting between representatives of the Federal Government, the Central Bank of Nigeria and leaders of the private sector including bank chief executives on Tuesday, government waived legal provisions to allow companies to buy-back up to 20 per cent of their shares from the floor.
Banks also agreed to reschedule repayment margin facilities and partner with market makers to inject funds into the capital market through appropriately structured credit facilities.
Besides, the Nigeria Stock Exchange and stockbrokers agreed to reduce fees while restrictions were placed on new listings until the market stabilised.
Also the daily downward share price movement was pegged at one per cent maximum though the current five per cent limit on upward movement was retained.
A Presidential Advisory Team was also constituted by the Federal Government to find ways to stabilise the Nigerian capital market.
Briefing stockbrokers and journalists in Lagos on Wednesday, the Director General of the Nigeria Stock Exchange, Prof Ndi Okereke-Onyiuke, said that the move was necessary to ensure that investors were aware of that action was being taken to stem the downward tide in the market.
Chief Executive, Financial Derivatives Company, Mr. Bismark Rewane, said the intervention was necessary, as share prices had dropped too low.
?This is a better intervention unlike what happened the last time and we expect prices to begin to climb. But government?s economic activity has to increase in terms of disbursement of capital votes, public institutions need to increase stock buying to show confidence,? he said.
Rewane, however, expressed reservations on the one per cent peg on downward share price movement saying it was unnatural.
Also commenting on waiver on share buy back, the Chief Operating Officer, Centrepoint Investment Limited, Mr. Jire Oyewale, said that the move was essential in ensuring that companies? shares do not trade at a loss, and that investors? holdings will not lose value unnecessarily.
He said, ?This is what obtains in other jurisdictions, and I don?t think it would be bad if we also introduce that in our own environment. So I think the move is necessary, because this is a dynamic market, and anything that can be done to ensure that investors do not lose much on their investment is welcome.