The people who lead our markets especially at the level of the operators are very funny people. I am an operator and would dare to stand out and stick out my neck on this matter of intervention Fund. Each time the market goes down south, they come out with empty bowls asking for Government to intervene. This always make me laugh, Government intervene in what manner and with whose funds and to the betterment of who. These are the questions they never ask themselves before they embark on this periodic mission.
The market has outperformed itself by being listed as one of the worst last year and this year it is still heading down south. The reasons adduced to this situation is very clear. The dwindling oil prices affecting Government revenue thereby causing systemic dislocation in the allocation of resources in the economy. The Stock Exchange as a barometer of economic performance would reflect the situation by the All Share Index also going down. That is how close to perfection our market has been, this has always been the prayers of serious minded investors, a market that responds to the forces of demand and supply appropriately and always finding its equilibrium in all transactions.
So when our leaders come out and scream Intervention Fund, I look at their suits and wonder what is going on. Will it not be an aberration if the market is doing well under such macro economic malaise, will they be comfortable in continuing to trade under such conditions when most companies quoted on the stock exchange are sending profit warnings?
This is not time for self seeking moves, this is a time when the total good of the Nation should be pushed by all sectors. For those of us who do not understand how the market works, the market especially the secondary market provides a platform where people can trade on their shares. This platform allows for the creation of wealth by all classes of investors who in turn will divert these wealth the the real sector of the economy. The market also allows for the raising of the much needed capital for entrepreneurs and real sector operatives, and all these activities are made possible by brokers and other players who earn a fee for their services.
So when people in funny suits ask for an Intervention Fund I begin to wonder who exactly needs the funds and why Government should if at all even consider this kind of request in the face of diminishing resources and a gaping budget deficit. Is the fund meant for the Nigerians who bought shares and have watched their investments take a tumble? Did they buy the shares for public good? Is the fund for the brokers who in their proprietary trading positions have taken a hit or who have seen their fees peter out as a result of the fall in prices and is their activity for the public good? Or is the fund meant for the private companies whose shares are listed with the promoters holding significant stakes that are never traded and are they holding the shares on behalf of the Nigerian people or finally is the Fund meant for the Regulatory Authorities so as my Elder Statesman Prof. jerry Gana would say so they can regulate well.
You see the unseriousness of this proposition. It just shows the lack of understanding of the real reasons why markets exists. We should be pushing for less government involvement, a total deregulation of the markets and the economy albeit within the framework of a strong regulatory environment so that private wealth can be truly created and sustained. But instead our suits are asking for further Government involvement or do they really think that Government would throw in the Funds and now say enjoy.
The answer to the market crash is very simple. Retail. Our suits can see it but do not have the patience or resources to cultivate that market hence their resolve to go the short cut to go a begging from a Government that is in itself in a quandary.
We have over 60m potential retail investors in the country. A massive public awareness campaign can push this market to tilt the market dominance of the FDIs and huge short termist Institutional investors in favour of long term retail equity holders. Last I checked we have about two million CSCS accounts and in a Country of over 100m people this is a travesty. What we need is a comprehensive mobilization campaign that would drive local retail investments towards the markets. These retail investors can mop up the shares and hold to at least stabilize the markets pending when all this is over.
They can also reflate the primary markets as companies can now resume public offers targeting the little savers. You see our problem is that we are a country of ready made things. We do not want to suffer, we like short cut. Everybody wants to drive a Range Rover without having to learn how to ride a bicycle first. That is why a whole Association of Issuing House who I dare say are peopled by my senior colleagues and who trained me can be immediately jumping to ask for Intervention Fund every little time the All Share Index dips a little.
This I am sorry to say is a reflection of a dearth of ideas, unwillingness to work hard to redress the situation of the markets even with the solution staring at us in the face. The market looses trillions daily in value, do you know what 100,000 people with just N10,000 can do to the market cap of a small cap stock if they suddenly decided to buy. The prices today favour the retail investor all we need do is generate ideas and infrastructure that would service this market cluster that is not even prize sensitive in terms of brokerage commission.
Some firms remain very emphatic on the large trades that come from the international investors. But guess what with their huge volumes, they paid next to nothing as commission to the brokers and if you compare this to my local retail people who still paid the full commission on their trades you will see that the local brokers had more efficient incomes than the ones that were servicing the huge pension Funds and international brokers.
So my people an Intervention Fund is not it and it negates all that I have been taught about free enterprise. It is a lazy man’s way out of a simple problem. We have the population, we have the relative spending power, let’s use it. Let’s harness the power of the retail market to turn around the fortunes of our chronically ill market.
I have just launched the Aspire Investment Club. This club seeks to mobilize youths showing them the positive gains of retail investing. We will use social media to tell our story and capture our teeming youths with the language they understand. The Pension Funds have mobilized trillions although with regulatory enforcement, same can be done through value driven moral persuasion. Billions can be mobilized voluntarily though hard work and channeled towards the market.
If nobody will do it. I will do it. I have started and will succeed without any intervention fund which would in effect be another platform for the inefficient pillage of scarce government funding.