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    Use our pull-down menus to find more stories OR subscribers use AllAfrica's Nigeria: Financial Markets Await Effects of Global Interventions This Page This Page on this article The Publisher's Site (Lagos) OPINION 6 October 2008 Posted to the web 7 October 2008 Kingsley Ighomwenghian For equities analysts at Meristem Securities Limited, there couldn't have been a better way to describe the situation currently pervading the global stock market, which of cause include our local clime here in Nigeria than to call it a disrupted market. The argument by them is that the markets worldwide have ceased to function in a regular manner, as can be seen from the rapid and large declines in their measurement indicators. While the markets in Europe, America and Asia have come under heavy pressure from the effects of the sub-prime mortgage crisis that began last year and has resulted in the loss of executive jobs in some of the world's best known financial institutions, sometimes leading to the death of such institutions, the case of Nigeria has been linked to uncoordinated policy measures. Most of these policies led to what Okechukwu Unegbu, chief executive officer of Maxifund Investment & Securities Plc refers to as "unintended consequences of the policies." Such disruptions as these, according to analysts "can result from both physical threats to the stock exchange or unusual trading (as in a crash). In either case, the disruption creates widespread panic and results in disorderly market conditions." Although there has been several measures especially by the government of the United States of America and other global central banks, including Nigeria, to check the effects of the market declines, the various market indicators are yet to respond appropriately to the bailout efforts, even as many insist that what is needed is confidence boosting mechanisms. There was palpable tension across the major stock markets at the close of last week's trading session from US where there is so much uncertain about the outcome of government $700 billion talks that was released on Monday in a bid to ease credit crunch. The DOW Jones Index caving in by 0.63 per cent, while the NASDAQ lost 1.51 per cent and Standard & Poors 500 index shed 1.19 per cent. Europe was not left out beginning with London's FTSE, which dropped 2.09 per cent; Germany's DAX index slide 1.77 per cent and France's CAC-40 plunged 1.50 per cent, the declines continued on Monday as they fell 1.68, 1.77 and 1.66 per cent respectively. The gale of declines did not leave out Asia, as Hong Kong's Hang Seng Index tumbled 1.33 per cent, while Japan's Nikkei 225 average tumbled 0.94 per cent. The Shanghai benchmark in China jumped 9.5 per cent, following what analysts believe stems from the realization by most of Asia that their partners in Western economies are going through life threatening a recession that would be difficult to resolve. As part of the ongoing global turmoil, reports had it on Monday that Belgian financial services giant and one of the investors in a Nigerian bank, Fortis Group, has been given a $16.4 billion rescue by governments across Europe. As part of the bailout plan, each of the governments is to own about 49 per cent of their local units. According to the bailout package, the $700 billion will be released in stages, even as skepticism remains strong across the market. In Nigeria, traders watched as the Nigerian Stock Exchange continued on its downward trend at the weekend, evidenced by the 1,101.81 basis points or 2.32 per cent decline after five successive days of slides last week in the All-Share-Index and N182.158 billion loss in equities capitalisation in a week when two stocks- Daar Communication and Chams, were listed by introduction, just as there was a phenomenal increase in the number of losers. The market also witnessed a decline in the number of stocks closing on net bid. Particularly, at the close of Friday's session, 132 stocks were traded, out of which only five closed higher, while 69 closed lower and 58 closed flat. Lamenting the situation last weekend, analysts at CSL Stockbrokers Limited regretted that "the market is still dealing with the implications of a near perfect storm which has created havoc on three fronts - falling stock prices, loss of confidence and liquidity drought amongst investors. We remain pessimistic about the current situation in the market and await further clarity on the implementation of other measures." The most important need of the market at this time, analysts also agree amidst the plethora of policy initiatives being undertaken by various stakeholders under the guidance of the Presidential Committee on Capital Market led by Finance Minister, Dr. Shamsudeen Usman, is the release of liquidity and confidence boosting. Speaking on the outcome of the recent special meeting of the Central Bank of Nigeria Monetary Policy Committee at a forum a fortnight ago, CBN Governor, Prof. Chukwuma Soludo noted that committee reviewed "the possible consequences of what is going on globally on our own economy and the prospect in medium term in view of what is going on globally. We came to the following conclusions- first, in spite of what is going on globally, the Nigerian economy remains strong, and I must thank God that we completed our consolidation before the crisis began and today what you hear around the US and the world is consolidation, mergers and acquisitions. "I want to say that the Nigerian banks and financial system remains sound and safe more so, with our foreign reserves at over $63 billion, we have enough reserve to withstand any shock, foreign capital inflows remains strong and as at the end of August this year foreign capital inflows stood at $8.5 billion compared to $5.5 billion as at the end of August of 2007. Relevant Links But for the lack of liquidity, this is the best time analysts agree that to be in the Nigerian stock market, to become the first and biggest beneficiary when the certain market rebound begins. Page 1 of 2 1 AllAfrica aggregates and indexes content from over , plus more than , who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are . Share this on: | | | | | | Questions or Comments? . Read our . Today's Most Active Stories Most Read Most Commented Most Emailed