SEC PRESS RELEASE

July 27, 2010

The Securities and Exchange Commission (SEC) in its avowed commitment to restore investor confidence, enhance market integrity and protect everyday investor, is taking two hundred and sixty (260) entities and individuals to the Investments and Securities Tribunal (IST) for alleged violation of the Investments and Securities Act (ISA), 2007.

 

These entities and individuals including banks and other capital market operators are alleged to have been involved in price fixing, share price manipulation, fraud, and insider trading. These activities are contrary to the provisions of the Act.

 

The ISA 2007 prohibits the employment of any device, scheme or artifice that would operate as a fraud or deceit on any person in connection with the purchase or sale of securities. Many of the respondents were alledgedly engaged in such deceptive and manipulative activities.

 

Several entities and individuals that are being proceeded against have allegedly engaged in false trading which is prohibited by the ISA. False trading is where an individual or entity engages in activities that may create a false or misleading appearance of activity in any securities.

 

Another alleged violation by these entities and individuals was the purchase or sale of securities that did not involve a change in the beneficial ownership of the securities and transactions conducted to maintain, inflate, depress or fluctuate the price of a security.

 

Actions were also filed against some individuals who were alleged to have engaged in insider trading by using unpublished price sensitive information in relation to purchase or sale of securities.

 

The Commission is seeking injunctions, monetary penalties and the disgorgement of profits gained in violation of the ISA. The Commission appreciates the cooperation of all who aided the investigation and particularly the assistance of the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC). The benefits of collaborating have meant that the Commission was able to achieve much more with the very little resources that it had. Between the SEC and its partners we want to ensure that regulation and enforcement have a crowding out effect on criminal activites in the capital market.

 

Finally the Commission would like to emphasize that a credible enforcement programme is a key component for ensuring the fulfillment of its critical mandate of protecting the everyday investors in the Nigerian capital market.

 

Lanre OLOYI

Assistant Director/ Head Media

Securities and Exchange Commission (SEC)

27/07/2010.

 

PROSHARE COMMENT: CAVEAT EMPTOR IN THE MARKET:

 

This news came in at 22.15pm today; some four weeks after the SEC had moved against some 36 stockbrokers. It is instructive to note that the SEC has refused to provide the names of these individuals which we intend to source directly from the ISA tribunal as part of our effort to keep the public dully informed. We therefore issue a CAVEAT EMPTOR on those firms which have had a history of infractions, some of which are notable names and for which there have been a long list of pending cases outstanding against them at the SEC, some of which dating back to 2007.

 

We await SEC’s list of firms involved in the infractions noted here and placed before a public court.

 

Kindly visit our site to read our expose on quoted firms and the games played to the detriment on investors which will be launched on Friday this week.

 

For enquiries, kindly contact us at info@proshareng.com

 

Additional Insight:

 

Exclusive jurisdiction of the Investment and Securities Tribunal

 

Ajayi v. Securities and Exchange Commission (2009) 13 NWLR (Pt. 1157) 1

 

Thursday, 11 March 2010 01:10

By: Ayokunle Ogundipe 

A decision of the Court Of Appeal affirming the exclusive jurisdiction of the Investment and Securities Tribunal in disputes arising under the Investment and Securities Act.

 

Specialized courts” although somewhat novel in Nigeria are not entirely so on the global landscape. Their evolution is owed largely to the exigencies of modern business which demand flexibility, speed and cost-effectiveness in the formal adjudicatory process. In some ways comparable to foreign tribunals such as the United Kingdom’s Financial Services and Markets Tribunal, although perhaps not as widely acknowledged is the Nigerian Investment and Securities Tribunal (IST).

 

The IST is responsible for the resolution of all disputes arising out of the application and enforcement of the Investment and Securities Act 2007 (ISA 2007) and appeals from its decisions lie directly to the Court of Appeal. An award or judgment of the IST upon registration with the Chief Registrar of the Federal High Court shall be enforced as though it were a decision of the Federal High Court. This is however not indicative of a shared jurisdiction between the two courts in disputes relating to or arising from the operation of the IST 2007, as the Court of Appeal hastened to restate in the case under review.

 

The Facts:

 

The appellant was the former Finance and Accounts Manager of African Petroleum Plc (AP Plc) until his retirement in 2001. Sometime in May 2004, the appellant became aware that the Administrative Proceedings Committee (APC) of the respondent had found him culpable as one of those who authorized the issue of his former company’s prospectus in 2000, which was later found to have contained incorrect statements.

 

The appellant further discovered that the committee’s findings were potentially injurious to his career as a chartered accountant and in addition, exposed him to criminal prosecution. The appellant felt aggrieved more so as he claimed he was not one of those who authorized the issue of the said prospectus. He was never served with a hearing notice of the allegation against him, nor was he afforded the opportunity of making any representation to the committee before the decision was reached. 

 

The appellant accordingly filed a motion ex parte at the Federal High Court, Abuja seeking leave to apply for judicial review of the respondent’s decision. Leave was granted and subsequently the appellant filed a motion on notice seeking inter alia for an order of Certiorari. Certiorari is a remedy in administrative law that seeks, as in this case, an order to remove the decision of the respondent into the Federal High Court for the purpose of quashing same.

 

The trial court after hearing arguments from both parties declined jurisdiction to entertain the suit and accordingly transferred it to the Investments & Securities Tribunal (IST) pursuant to its powers conferred by virtue of Section 22 of the Federal High Court Act Cap F 12 Laws of the Federation of Nigeria (LFN) 2004.   Aggrieved, the appellant appealed to the Court of Appeal. 

 

The Issues for Determination and Judgment:

 

The appellant contended on appeal that the Federal High Court had jurisdiction to entertain its complaint being a complaint against an Administrative Tribunal. The respondent on the other hand raised a preliminary objection on the grounds that by virtue of Section 22 (4) of the Federal High Court Act, the decision by the Federal High Court to transfer the suit could not be appealed against to the Court of Appeal.

 

The appellate court adopted the following issues for determination as raised by the Appellant; Whether the Federal High Court was right in law when it held that the ISA confers exclusive jurisdiction on the IST in respect of matters relating to the operations of the Investment and Securities Act 2007.

 

Whether the Federal High Court ought to have quashed the decision of the Administrative Proceedings Committee of the respondent complained about by the appellant on the grounds that the committee’s proceedings were conducted in violation of the rules of natural justice. 

In arriving at its decision unanimously dismissing the appeal, the Court interpreted the provision of Section 22 of the Federal High Court Act alongside Section 241 (1)(a) of the Constitution of the Federal Republic of Nigeria 1999 (CFRN 1999). Having regard to the superior status of the latter, it found that notwithstanding the provision of the ISA, the decision upon which the appeal was based was a final one and therefore appealable as of right according to the CFRN 1999. The respondent’s preliminary objection was therefore dismissed.

 

The Court of Appeal however further found that before a court is competent to adjudicate, the subject matter of the case must be within its jurisdiction and must come to the court by due process of law and on fulfilling any conditions precedent. In this case, upon a combined reading of sections 224 (1), 234 (1), & 236 (1) of the Investment and Securities Act Cap I 24 Laws of the Federation of Nigeria (LFN) 2004, the proper forum was found to be the IST which the court held, disqualified the Federal High Court from exercising jurisdiction.

 

On the second question, the court considered whether in administrative law, it was permissible under any circumstance, for a tribunal to conduct proceedings in the absence of the party in question and find him culpable without hearing his side of the story contrary to the rules of natural justice. 

Following the precedent established in the case of Falomo v. Lagos State Public Service Commission (1977) NSCC 230 per Idigbe JSC, the court held that where a statutory provision excludes the need for prior hearing but provides for an administrative appeal or judicial review on the merits of the decision of that body, the duty to apply the audi alteram partem rule (that is, the rule that requires the other side be heard in any adjudicatory process) in its proceedings becomes waived. 

 

Citing the case of Itseghosimhe v Ogbeta (2001) 13 NWLR (Pt. 729) 26 at 36 in support and having found that the trial court had not erred in principle and had, in fact, acted appropriately within the provisions of the necessary laws, the court held that the trial court indeed lacked the competence to quash the decision of the Administrative Proceedings Committee of the respondent. The entire appeal was accordingly dismissed and the decision of the trial court affirmed.

 

Comment:

 

Ordinarily, where a judicial or quasi-judicial body disregards the principles of natural justice, the courts will intervene to protect the aggrieved party and an application for any of the prerogative orders of Mandamus, Certiorari and Prohibition will ordinarily not be treated lightly by any court of law. They are discretionary common law remedies which the High Courts may grant in exercise of their supervisory jurisdiction over inferior courts, tribunals and administrative bodies. 

 

However, where a statute provides for a means of seeking redress in relation to disputes of a specific nature, the courts in their wisdom would be unwilling to act otherwise. This is not a denial of fair hearing nor does it trivialize the constitutionally guaranteed rights of the individual in question. However, specialized courts/tribunals such as the IST are established bearing in mind the peculiarities of the various sectors over which they adjudicate. As such, the rigid posture of the courts to decline entertaining such actions will only help to further strengthen and develop their growth and acceptance to the extent experienced in more developed nations. This will ultimately step up the pace of doing business in Nigeria.  

 

*Ayokunle Ogundipe is an Associate in the commercial law firm of Perchstone & Graeys

 

“The "brutal" lesson we can learn from the past 10 years is that valuations are the core determinant of equity market returns”. – Paul Farrow, February 23, 2009

 

 

Eight lessons of investing

I believe the fundamentals of equity investing remain unscathed and investors should learn eight key lessons. During the past 18 months we have seen unprecedented economic events, but I believe the fundamentals of equity investing remain unscathed and investors should learn eight key lessons.

 

Lesson one: patience is a virtue

Market sentiment can create exceptional opportunities for investors with patience. At times of market ''panic'', share prices fluctuate far more than underlying fundamentals of many businesses warrant. This creates great opportunities.

 

Lesson two: ignore econimists

While fund managers are frequently asked their economic views, macro-forecasting is notoriously difficult. The process relies on predicting a range of interrelated variables. The number of economists proven wrong during this crisis highlights the scale of the challenge. There is little point forecasting economic outlook or using macro-forecasts to determine company values. Economic growth often has an inverse relationship with subsequent stock market performance.

Research from the London Business School shows stock market returns are no higher in countries with high GDP growth and countries with low GDP growth can exhibit the best stock market performance. This is an intuitive trend. Stock markets are discounting mechanisms that always look forward and equity markets can rally even while economic growth remains low.

 

Lesson three: cheap is best

If macro trends are not the best indicator of stock market returns, valuation remains the surest guide to future investment performance and data illustrates that buying securities on low valuations gives the best opportunity for future returns.

Buying shares at around 5-10 times earnings, would usually see annualised returns for the next 10 years of more than 10pc. In contrast, buying shares on 25-30 times would see extremely disappointing future returns.

 

Lesson four: good companies are not always a ''buy''

Buying a ''good'' company at the wrong price can seriously affect overall returns.

GlaxoSmithKline, a very good company, generated earnings per share of about 50p in 1999-2000 and was trading at around £20 – equivalent to 40 times earnings. Despite good earnings growth, it did not offer good value at that price. Ten years on, earnings have doubled while the share price has halved. The stock is more attractive now.

 

Lesson five: it is the average that counts

Peaks and troughs are part of operating and share price performance, but there is a tendency to revert to averages. Companies with high profits are unlikely to generate that growth forever and companies with low profits are unlikely to be stuck in long-term ruts. When valuing companies, strip out peaks and troughs and look at average long-term earnings potential – the intrinsic value or ''normalised'' profit potential.

Barclays' share price was about 700p in 2007, with earnings per share (EPS) of 70p. However, EPS looked unsustainably high given a ''normalised'' earnings estimate of 45p per share.

Mean reversion worked its magic and by April 2009 earnings forecasts dropped to 12p per share and shares to 50p.

Barclays faced obvious pressures, but this seemed a good company whose long-run earnings potential did not appear to have changed. The shares seemed to be trading at just one times normalised earnings – a low valuation that has corrected significantly in the past year.

 

Lesson six: dividend history is key

As investors search hard for yield, it is important to note companies' long-term ability to pay dividends, rather than being swayed by short-term distributions.

Some utility companies need to increase their debt every year in order to maintain their dividend at its current level. Conversely, a company such as AstraZeneca looks to be generating £8-9bn net cash each year, and is paying around £4bn in dividends. This is clearly sustainable and also gives the company flexibility.

 

Lesson seven: size doesn't matter

Tracking error (how different a fund looks from its benchmark index) is a widely used ''risk'' measure, but it is inappropriate to assess portfolios on this alone. Not owning a large FTSE All-Share constituent like British American Tobacco results in a higher tracking error and, theoretically, a higher 'risk'.

However, is it more or less 'risky' for investors to buy a company simply because it accounts for a large proportion of the index, and potentially overpay? It is preferable to assess investments in terms of absolute risk, looking at valuation risk (the risk of overpaying), earnings risk (the risk earnings decline over time) and financial risk (the risk of insolvency).

If an investment's potential returns significantly outweigh the balance of risks, it should be viewed as an attractive long-term opportunity, regardless of index size.

 

Lesson Eight: Don't follow the herd

Willingness to go against the crowd (and for your fund to look different to the index) is fundamental for generating superior long-term returns. Given ongoing search for yield and the disappearance of the banks as major dividend payers, many income funds have been forced into a smaller set of high yielding stocks. In many cases, these are among the biggest stocks in the market – names like BP, Royal Dutch Shell, BHP Billiton and Tesco. This trend has left many funds in the income sector clustered in just a handful of stocks. This is not the way to produce superior performance.

 

Kevin Murphy is the manager of the Schroder Income Fund, Published: 26 May 2010

 

 

"It is generally agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of stock exchanges." – John Maynard Keynes in his book ‘A Tract on Monetary Reform’ (1923) Book 4, Chapter 12, Section 6, pg. 159

 

In past posts, I’ve argued that the cycle of negativity from regulators can’t help the market no matter the good intention driving it, especially if the objective is to promote the re-emergence of a virile and functioning financial market for Nigeria that can hold its place in a new world economy.

Today I’m turning my attention to the reactions from the market place about the real and imagined unintended consequences and wider ramifications of the statement attributed to the CBN Governor, Mr. Sanusi Lamido Sanusi, on Saturday, July 10, 2010 in Asaba where he had presented a paper on “The Economy In Perspective: Consolidating The Gains of The Banking Sector Reforms” and for which the press coverage had presented the market in such a prose that it necessitated a rebuttal within 24hours from the apex regulator’s communication team.

Nigerian newspapers and online newswires (local and international) had picked up on aspects of the comments made during the session on Saturday, July 10, 2010 with screaming headlines causing maximum panic and apprehension to the investment community, depositors, bankers, stockbrokers, regulators, investment professionals, market operators, analysts, and the general public.

Catching our breadth

Would it have made a big difference if the CBN Governor had used the phrase “bankers took unnecessary risk” in place of the word gamble; or if he had used the term “poorly supervised capital market” instead of casino?

By the way, we had used the terminology as an analogy with reference to what transpired then just as it has been used by other responsible persons hoping to draw a link with what must change. The Director General of the Securities & Exchange Commission had said publicly that “it was unfortunate that people thought that the stock market was a one directional casino that never traded down”.

At the same forum, a serious minded financial journalist had also expressed concerns with the state of affairs describing the Nigerian Capital Market (NCM) regulatory framework as an analogue regulator in a digital market to much acclaim by the stakeholders present sometime in February 2010.

Symbolisms have always been with us though. Prior to the new DG’s appointment, the Musa El-Faki led SEC had on February 14, 2008 or thereabout made allegations against six firms it termed as enjoying ‘unprecedented capital appreciation in their stock prices’ – AP Plc, Afroil Plc (a decided case), Big Treat Plc, Capoil Plc, First Aluminium Plc, and IPWA Plc (page 52 of the Proshare NCM 2009 Report – http://www.proshareng.com/reports/view.php?id=1940). This in itself generated a huge media exposure owing to the exchanges between the NSE and SEC.

Not just this once, the Director General/CEO of the Nigerian Stock Exchange, Dr. Ndi Okereke-Onyuike had openly complained of price manipulation and had taken decisive steps to address this sore but usual infraction in any capital market – a development that occurred with such frequency that led to a situation where market players themselves likened the aftermath of actions in the capital market to that of a ‘casino’.

In general, the thinking then and now was such that an open admission of the rot we had dug ourselves into would amount to a first step in the cleansing process that was needed to rebuild the market, laying the foundation for a rescue and reform agenda needed from the money and capital markets – as a bridge to what must happen to avoid such a nomenclature being ascribed to this important institution of wealth creation in the economy.

Thus, the CBN Governor’s statement should naturally amount to nothing more than an acknowledgment of our reality as at that time. The reaction that took place subsequent to the Saturday publication must therefore be located somewhere other than in what the CBN Governor said, and how he said it – but perhaps in how often he repeated the same cliché, the stature of his office, and concern about the intended purpose.

So what was it SLS was reported to have said?

I will rely on the exact wordings as used by a leading newspaper, in its cover page story reproduced here http://www.proshareng.com/news/11316

Immediate deductions to be made from the publication and rebuttal

The rebuttal’s basic assumption is that the news report was deliberately misrepresented for sensationalism. It then goes on to place in ‘proper context’ the exact news – as it was used. There are a few reasons why this position, justified as it is, should be placed in context and the matter dealt with once and for all.

First, the CBN should by now have realised that in a digital age, the CBN Governors’ speech is not an opinion but a commentary/appraisal from a policy maker. Thus, any commentary from the CBN Governor would naturally make front cover of the business and mainstream news platforms – making such comments as alluded to in the rebuttal, makes it all the more juicer. CBN however could have helped its course if such a speech was loaded on its site and sent to all opinion platforms after the speech; thus mitigating any misrepresentation or out of context quote – his explanatory comments such as reported would have therefore been naturally discounted by the investing and general public (and in most cases go unreported given the context it was used).

Second, the CBN Governor has developed a reputation or created a perception as a very passionate and principled leader who believes very strongly in the country and the vision of a financial market place founded on trust, integrity and an application of best practices – values which those who have benefited from the system cannot and would not permit to be enthroned and as such; any mis-step or statement open to ‘misrepresentation’ becomes an “open game”. The examples of such abound and perhaps it is time to reflect on this ‘need to say my own side of the story’.

Third, the barrage of messages from the CBN has equally played right into the hands of those who seek to use signals, innuendos and mis-steps to defend a viewpoint; or at the other end of a spectrum, validate a CBN action post-script-fed conspiracy theory on the ‘true’ motives behind the interventions. Ironically, no one intelligent enough to discern and articulate the dimensions of events leading up to the intervention will invalidate the diagnosis and basis for intervention by the CBN Governor. The problem it seems lies with the prognosis and execution.

Fourth, the CBN ought to be aware of a phenomenon in the Nigerian media referred to as “pack journalism” where correspondents on a particular desk/beat work closely with each other in such a way that if one is unable to attend an event due to commitments, he is able to report the same event ‘as if he were there’- no different from how agency reports or press releases are used. This must have accounted for the ‘syndicated’ nature of the story. This is all the more serious when one recognises that the nature of financial reporting has over the years taken on a similar outlook as that for ‘political-type news’; driven in the main by the need to catch the attention of the reader who is easily uninterested in the regular headlines that means less and less to him/her daily.

The position taken by the CBN on the ‘need to always respond’ has always been that the CBN needed to take the fight to those who sought to control public opinion about the interventions. This is true, at least from a media standpoint – as the forces gathered against such change as proposed by the CBN Governor is truly formidable and well funded; and as a responsible public officer, all he has is the weight of his office to make his case to the public – using platforms and opportunities to make his case.

Yet, the mixed deployment of cases – one which requires the defence of the policy on the one hand, and on the other hand; requiring a definition or redefinition of the argument in the public space has often led to unintended consequences spiked by mixed messages i.e. that of a fighter, a radical as against a reformer measured in approach and context but driven by a nationalist zeal to elevate his country’s profile.

Despite this, the opposition remains formidable and continues to grow in strength and renewed fervour (exemplified by the intensity of activities such as the paid advertorials and commentaries on the man, his message, ministry and mission), and designed to do one thing – highlight his strategy and approach as fraught with pitfalls and un-intended consequences – a key example of which played out on Saturday, July 10, 2010.

The Real Message Lost (in editorial judgement, perception and motive)

Sadly, lost in all these are the more cogent quotes from the CBN Governor, which if people paid attention to would have revealed the true message he sought to communicate. For the avoidance of doubt I would reproduce the quote (with specific emphasis on the highlighted phrases) from the same source that did not impress the newspaper houses but which spoke directly to intent, message and context of the Governor:

He said, “Although financial crisis is an integral part of every capitalist system, banks should stop preventing depositors and investors from technical and fundamental analysis and investors’ sophistication.

“We had a banking system in the past that was exposed to the capital market but without guidelines and regulatory system on lending margin. In the stock market, what people think about is how it will go up. But this market, this casino, is what those entrusted with depositors’ money gamble with.

“A stock market is a very funny casino. Don‘t entrust your money with gamblers. CBN rules and regulations around the banks cannot be compromised. We are not just doing the sanctioning; we are combing the banks for excellence. The banks must stop creating the impression that they have values when in the actual sense they are dying.”

To salvage the situation, Sanusi advocated for a Bank Use Act, to overcome what he described as “Insurance Business and Fixed Income Bubble,” adding that the current and saving accounts of depositors would no longer be allowed for use in executing private businesses.

Getting down to brass tacks – Gambling and Casino as an Emotion Trigger

What is the difference between gambling and banking therefore? How does one explain the analogy of a casino with the stock exchange outside John Maynard Keynes’ interpretation?

To differentiate between the two, we could therefore start by defining them. Comparisons are often made between the two activities, but not having seen where the terms were explicitly defined, a re-course to the business dictionary would be the only outcome.

I encourage you to try to define in your own words the terms 'gambling' and 'investing' on your own and compare what you get with what we found in the seminal work by Tom Murcko, CEO, InvestorGuide.com on the distinction between the terminologies where he concluded by referring to Benjamin Graham (author of The Intelligent investor: a book of practical counsel) for further emphasis.

In The Intelligent Investor, Benjamin Graham had said: "The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is a cause for concern. We have often said that Wall Street as an institution would be well advised to reinstate this distinction and to emphasize it in all dealings with the public. Otherwise the stock exchanges may some day be blamed for heavy speculative losses, which those who suffered them had not been properly warned against."

He continued: "Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook …. There is intelligent speculation as there is intelligent investing. The difference lies in the outcomes and steps taking to mitigate same”.

These appear to be the founding basis for the submissions of the CBN Governor on the market – where he made the connection between intelligent investing and wild speculation done in concert with unsuspecting customers – and I suspect that his use of the term 'gambling' had nothing to do with talking down the market but describing a conduct not beneficial to investors.

It is necessary for us all to get over this debate and move on the serious arguments about the linkages needed to be established between monetary and fiscal policies; a shift from the past using a rear view mirror; and definitely a focus on creating incentives and generating enthusiasm for the market reforms needed.

I am looking forward to such a healthy debate in the weeks ahead with SLS playing a key role; as we redefine the engagement rules between the CBN, other regulators, market players, analysts, investors, the general public and the much needed media.

Olufemi AWOYEMI, FCA

CEO, Proshare Nigeria Limited

 

 

The Nigerian equities market in the period under review (with more emphasis on the second three months of the year-April-June 2010) trended in the opposite of the expectation of the investing public. The negative performance recorded in the period which consequently brought the year to date performance down was against the positive forecast made for the period.

 

Apparently, one would expect that the market would definitely trend northward given the resolution of the political impasse that existed then – one which impacted the steam-engine ride of Q1 2010, without much quagmire. This expectation, as alluded to in the report, soon faltered along with the analyst expectations for a build-up in the pace of recovery. Not a few investors in the equities market had a ‘bad day at the office’ as prices turned southward on most of the trading days during Q2 2010.

 

At the end of H1 2010, the market achieved in a slow down in the rate/pace of recovery achieved at Q1 2010 relative to the starting point on January 04, 2010.

 

In considering the market outlook for Q3 2010, and giving consideration to the relative weight of the banking industry in terms of market capitalisation, Standard & Poor's (S&P) statement last week was particularly hurtful.

 

S&P had said that Nigerian banks continue to look extremely risky, despite a bailout of the sector last year and that it considers the Nigerian banking sector is (B+/Stable/B) and of high risk, pointing out that it placed Nigeria's Banking Industry Country Risk Assessment (BICRA) in Group 9 similar to banking systems in:
i. Costa Rica (local currency BB+/Stable/B, foreign currency BB/Stable/B),
ii. Lebanon (B/Positive/B), and
iii. Belarus (local currency BB/Negative/B, foreign currency B+/Negative/B).

 

In explaining the low rating and high-risk tag on the nation’s banking sector, it said the development is inherent to the country’s operating environment, evident in high unemployment, low wealth levels, and high political risk.

 

It identified a number of hurdles in the way of the recapitalisation of the rescued banks, the execution of the banking reforms and the return of the financial institutions to profitability, and concluded that the CBN might need to guarantee the acquisition of the rescued banks to be able to win the interest of investors.

 

The rating agency said that further consolidation and international participation in the Nigerian banking sector remains likely, “although it remains unclear how and when this will take place.” It said the Nigerian capital market might not be supportive to the recapitalisation of the banks owing to the legal battles regarding the ownership of the ailing institutions. See our conclusions on August 22, 2009 on the CBN Intervention under the title – THE BULL IN THE CHINA SHOP – http://www.proshareng.com/reports/view.php?id=2016 .

 

On page 6 of this landmark treatise, we said that “This is a whole lot for our fragile market to absorb at a go. We have set ourselves up for a big battle and it will come from all sides and even from the blind side. We cannot embark on a journey – driving with a rear view mirror. If the truth must be told, we have reversed many of the gains we made so far, as imperfect as they were; even as we further acknowledge that a few were built more on perception than reality.”

 

We went on to list out the unintended consequences of the steps being taken – with a view to guide the regulators – on pages 34 to 38. It gives no joy to note that the current development was not only avoidable but necessary.

 

On June 28, 2010, we published an article titled – The CBN and Economic Growth – Consistent Inconsistency – http://www.proshareng.com/articles/2097 where we stated that "The key to delivering on a sound economic growth lies in the ability to bridge the disconnect between fiscal and monetary policies – avoiding over promising and under delivering…..just as avoiding creating an over-regulated environment which might act as an impediment to growth."

 

In the report, we re-iterated our 2009 position that the eventual sales of the banks does not appear feasible without much harm being done to the rule of law and an introduction of a ‘variable regulatory regime’ – one where the CBN makes decisions and varies them based on changing circumstances to the obvious disadvantage of those who complied with previous mandates – a highly subjective clime that indicates an era of over-regulation of sorts. We believe that any market left un-regulated would naturally get out of hand; but recognise that does in charge of the nations regulatory regime must learn and identify where regulation stops and over regulation begins; and when.

 

We concluded the report by saying that “The question/issues we should now be focusing on is no longer about the banks and the banking sector, it is about the economy and the policies – monetary and fiscal that drive it on a consistent and quantitative manner for the benefit of the state and the citizens”.

 

We now note that a possible shift may occur as gleaned from Lamido Sanusi, the CBN Governor’s comments to Bloomberg last week that bank lending has been slow to recover after last year’s bailout. The Governor was quoted as saying that “It will take a little while. The general macroeconomic environment has to improve and a lot of that is about soft issues. It’s about confidence; it’s about belief; it’s about faith.”

 

Governor Lamido Sanusi said the weakness in the Nigerian economy can be addressed with the right policies. “We need to have structural transformation. We have GDP growth that’s driven by domestic demand. It’s just a question of improving productivity in our culture, improving critical infrastructure and creating a better business environment.”

 

Going Forward

As a critical bulk of the Nigerian Investor profile reacted to the ensuing financial crisis in Europe, a run was created on the market in the period under review as foreign investors sold massively to make up for their losses.

 

It is hopeful that as the crisis in Europe subsides, some normalcy would return. Though the volatility may still remain – mainly in the stocks of some of the banks that will really need the life support from the successful takeoff of AMCON, it is safe to expect that other stocks may experience an uptrend given the fact that many of them have reached their rock bottom. The Q2 2010 financial performance reports would prove decisive in our review and an eventual revision of the projections made here.

 

Read the Summary here

 

Kindly download full report here

"The key to delivering on a sound economic growth lies in the ability to bridge the disconnect between fiscal and monetary policies – avoiding over promising and under delivering…..just as avoiding creating an over-regulated environment which might act as an impediment to growth." – Executive Breakfast briefing Notes by FDC – 2009

 

Discussions on the Nigerian economy have largely been dominated by the focus on the banking sector for far too long. News reports, commentaries by money and capital market analysts, political leaders and law enforcement officers have tended to focus on this industry more than other sectors for the past decade and more. Less and much more focus has been placed on the non-quoted firms as well as other sectors listed on the bourse of the Nigerian Stock Exchange. The often used mantra, especially during the previous years was that the economy will go the way the banking sector goes – Nigeria, like London would become the financial hub of Africa.

 

Those who make these arguments advance the claim that stringent application of regulatory oversight and the all-in approach of an apex regulator (as now adopted by the UK government) from the monetary side can advance the development of the Nigerian economy.

 

The position is plausible if we had an integrated financial service blueprint that was linked to fiscal execution imperatives. But then, Nigeria has never been able to deliver this save for a brief period during the Dr. Okonjo Nwela and Prof. Chukwumah Soludo stint in office – before it all fell apart. The success of the debt relief, economic growth and clarity achieved then could be attributed to a measured use of regulation supported by a linkage between monetary and fiscal policy decisions.

 

Evidence available today however appears to indicate that we have gone further southwards in achieving this linkage with an over concentration on regulation – not just as a tool of management but as a means of re-ordering societal values and emphasis.

 

The latter will be a matter for a post-script at some later date in the future. Of immediate importance at this time must be the former – the role of CBN in managing the banking sector changes we all agree to (the diagnosis is correct by the CBN Governor) and the overall impact of the sector on the economy.

 

It appears quite clear that the CBN and indeed, most players in the administration of the country’s affairs desire to advance a clime that promotes an enabling environment for firms to grow their contribution and expanded linkage to the economy – albeit; in a virtuous way. This is where the contradiction apparent in new developmental economics throws a nation a curve ball.

 

Rather than be a veritable source of growth, it is appearing clear that over-regulation is acting as an impediment to growth.

 

A cursory review of the growth trends of the banking sector compared with the telecoms sector, breweries and the conglomerates (either singularly or as a block) reveals that while the banking sector growth is declining, the others are ascending – and that is despite the fact that this industries equally enjoy some form of regulation as well.

 

Whereas the banking sector had some many of its players are seriously considering approaching the market to raise money (equity and bond), NB plc and Guinness Nigeria plc have not and do not intend to. Why is this so?

 

It is the intention of this paper to present a birds’ eye commentary on the aggressive yet inconsistent application of regulation as a driver of growth. When one considers the examples of the south East Asian countries and compare this to other nations where aggressive regulation has been deployed consistently, the conclusions are stark.

 

To start of the discussion, we begin with a review of developments in the banking sector vis-à-vis the regulatory interventions that have taken place – steps which have been adequately documents in our reports – The Bull in the China Shop and 100 Days After – actions which delivered another major inconsistency yesterday with a press release from the CBN reproduced below:

 

The CBN Press Release – 280610

 

"Our attention has been drawn to Newspaper reports expressing concern on the deadline of June 30, 2010 given to Unity Bank Plc and Wema Bank Plc to recapitalize. 

 

We wish to inform the general public that due to unanticipated three months extension in timeline for setting up Asset Management Corporation of Nigeria (AMCON), the Central Bank of Nigeria has granted a three months extension for the two banks to recapitalize. The Central Bank of Nigeria is fully abreast of the significant progress made by the boards of the two banks on their recapitalization and is satisfied with the efforts.

 

It is our hope that with the progress made so far, the two banks should be recapitalized by the end of September 2010 through the combination of sale of toxic assets to AMCON and injection of fresh capital.” – Signed: M.M. Abdullahi, Head, Corporate Communications, 28th June, 2010

 

Background

 

It will be recalled that following the audit report jointly instituted by the CBN and the Nigeria Deposit Insurance Corporation (NDIC) on the 24 money deposit banks (MDB) in the country last year, Unity Bank Plc and Wema Bank Plc were directed by the apex bank to recapitalize to the tune of N25 billion minimum capital requirements on or before June 30, 2010 or close shop.

 

The October 03, 2010 declaration by the CBN Governor (excerpts):

 

i. After a review of the findings of the Special Examination report in respect of these 14 banks, the CBN said it came the following conclusions:

 

1. “The following 9 banks were found to have adequate capital and liquidity to support the level of their current operations and future growth: Access Bank Plc, Citibank Nigeria Limited, Ecobank Nigeria Plc, Fidelity Bank Plc, First City Monument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited and Zenith Bank Plc.

2. The 10th bank — which is Unity Bank — was adjudged to have insufficient capital but not in grave situation because it has a healthy liquidity position.

3. The remaining four banks were found to be in a grave situation: Bank PHB Plc; Equitorial Trust Bank Plc; Spring Bank Plc; and Wema Bank Plc.

4. "After a careful consideration of the matter, and in exercise of the powers conferred on him by Sections 33 and 35 of the Banks and Other Financial Institutions Act 2004, the Governor of the CBN, by order in writing, has taken a number of measures aimed at arresting the grave situation of these four banks. The measures are:

d). the order to the board of Wema Bank Plc to recapitalize by 30 June 2010. It is noted that Wema Bank Plc came under new ownership and management in June 2009 who took over a bank already in a grave situation and should not be held responsible for the present condition of the bank. The CBN will work with the Bank to ensure a successful completion of the recapitalisation exercise.

e). The provision of a total of N200billion (USD 1.45bn) by the CBN as liquidity support and long term loans for the four banks adjudged to be in a grave situation to enable them continue normal business, while pursuing recapitalisation options – NB: No breakdown/allocation was provided

f). The order to the board of Unity Bank Plc. to recapitalize by 30 June 2010. It is noted that Unity Bank Plc was adjudged to have insufficient capital for its current level of operations but was adjudged to have a healthy liquidity position and with no indication of poor corporate governance practices.

 

ii. The CBN has therefore exercised its powers under Section 13.3 of BOFIA to order the Board of Unity Bank Plc to recapitalize by the said date and the CBN will continue to monitor this situation.

 

iii. In addition, the CBN will assist the five banks with insufficient capital in their loan recovery efforts, just as it did with the previous five.

 

The June 30 deadline – Another in a long line of shifting targets

 

We reviewed the intelligence available to us and sought clarifications from the CBN on the outcomes of the pre-qualification exercises done for the banks, the much published sale of the R8 banks, the delay in getting a presidential assent and the implications of the June 30, 2010 deadline for Wema and Unity banks.

 

We did not get any response both to our text messages, e-mails and formal letter. We therefore decided to run a market-engagement communication and specifically, an advertorial on the self-imposed N25billion recapitalisation deadline set for the two banks – Unity Bank plc and Wema Bank Plc – by the Central Bank of Nigeria (CBN) on October 03, 2009; on the heels of an earlier decision on August 14, 2009 to take over five banks considered of systemic importance to the financial system; a significant part of the snowball effect of the ‘fast-paced’ intervention/’reform’ in the market. See the 100 days after report – http://www.proshareng.com/admin/upload/reports/100_days_after_Report_-_Proshare_251109.pdf – pages 13 to 15.

 

The reasoning was simple enough – the action taken by the CBN had put on the line its institutional integrity!

 

Feedback Received from the Market

 

The feedbacks received from the proshare investment community up till and including Friday, June 24, 2010 were that:

 

1. Wema Bank Plc would not be able to meet the N25billion capital base deadline for recapitalisation as it had always been since the Soludo era.

 

2. The management of Wema Bank Plc under SW8 Consortium was trying hard to meet the deadline under very excruciating circumstances that derailed their initial investment plans.

 

3. Wema Bank had embarked on an aggressive debt recovery effort which yielded some positive results (figures could not be substantiated) as well as a capital raising drive in 2010 which is yet to materialize.

 

4. Wema Bank Plc was exploring the option of reverting to a regional bank in the event that the CBN proposed bank model comes into force in time before the deadline; as a fail-safe strategy to address the inability to plug the hole in the bank and meet the deadline.

 

5. The Board of Directors of Unity Bank Plc and its financial advisers rose from a completion board meeting to roll out 23.928 billion ordinary shares of 50 kobo each at N1 per share to shareholders on the basis of three new shares for every two shares already held – http://www.proshareng.com/news/singleNews.php?id=10773

 

6. Unity Bank Nigeria Plc issued this advert now reproduced below – Rights Issue – http://www.scribd.com/doc/33209822/Unity-Bank-Nigeria-Plc-Rights-Issue-June-July-2010-Advert-ThisDay-Newspaper-June-14-2010

 

7. Unity Bank Plc sought to raise about N23.9bn from existing shareholders through a Rights Issue aimed at meeting the Central Bank of Nigeria (CBN) 10 per cent capital adequacy ratio for the bank. The offer opened on Friday, June 04, 2010 to end on Tuesday, July, 13, 2010. Specifically, the bank set out the purpose for the funds as follows: 50% or N11.66bn will be used as working capital/project finance; 25% or N5.8bn will be used for branch expansion; 10% or N2.3bn each for technology enhancement and human capital development, while the 5% or N1.16bn balance will be used for re-branding.

 

8. A consortium made up of northern businessmen under the auspices of Arewa Investment Alliance, is said to be holding talks with the board of directors of the bank, offering to pay N11n for a 40 per cent stake in the bank.

 

9. Both banks had released their financials for December 31, 2009 and Q1 2010. The results can be found here – http://www.proshareng.com/investors/company.php?ref=UNITYBNK and http://www.proshareng.com/investors/company.php?ref=WEMABANK

 

The alert we issued continued to generate interest with concerns generated from within and outside the country. Based on this, we reproduced a report by the Tribune newspaper yesterday on the subject – http://www.proshareng.com/news/11128 – with a commentary where we concluded that 'we are concerned'.

 

Questions! Questions!! Questions!!!

Reviewing the realities above and juxtaposing same against the communication from the Central Bank of Nigeria (CBN), the following questions become pertinent:

1. Why did CBN approve the Unity Bank Plc Rights Issue when it knew it would not be concluded as at the June 30, 2010 deadline it self imposed?

2. What informed its hasty decision on October 03, 2009?

3. When did the CBN disclose any information about a 3-month extension in AMCON and what has that got to do with Wema & Unity Banks?

4. Given that the CBN Governor has in the last nine months given three different dates for the AMCON take-off, is there not enough evidence to doubt the institutions credibility in target setting?

5. Given that the banks did not formally apply for an extension, when did the CBN know it was going to grant an extension and why did it not do same till the last day before the expiration? It could not have had an opening for compliance as both Wema and Unity were obviously not ready.

6. In granting this extension, two days after it issued letters to bank directors it now found not to have been involved in the corporate malfeasance allegations it made; is there pressure upon the CBN to take these decisions? If their in none, are we therefore finding a CBN recognising that it had taken actions inimical to individual careers, failure of the financial system to provide the enabling environment to address the unintended consequences from the much regarded and diagnostically supported thesis for intervention?

7. What is the believability index to be ascribed to a CBN that is not bothered about shifting the goal post as often – without conceding the implications on fairness and impact on customers and investors alike?

8. What was unanticipated about the AMCON bill and why is it taking so long to get a presidential ascent to a bill that has been one year in the waiting and designed to lift the economy, nay country; out of a quagmire as other nations have done.

9. Given that the Bank of England, under the David Cameroon government has reverted to the model of financial services administration used by Nigeria with the CBN as the apex regulator – how difficult is it to convince the Minister of Finance and the Goodluck Jonathan led government to consider an articulated plan of both monetary and fiscal policy to set Nigeria on the path of recovery and clarity of objectives/targets?

10. What is the purpose of the AMCON extension? Is it to give the president ample time to grant his ascent or to work out modalities for a bill already passed and expected to be passed? When one considers the statements by the CBN Governor that this bill will be passed in December 2009, then before March 2010 and later, not more than June 2010 – where is the credibility and confidence that this will come to pass?

11. What is the significant progress made by the boards of Unity bank plc and Wema Bank plc – since the CBN Governor is quick to make press releases on sensitive information and disclosures, why is there no measurable indices to work with here? On what basis is it satisfied with the banks and why were others not given such leverage?

12. What is linkage between the AMCON and Wema/Unity Banks? The press release seems to suggest that until the AMCON issue is resolved? both banks can and should take their time to resolve their obvious capital inadequacy issue. How can the CBN encourage such a situation where a bank is operating for over a year with an inadequate CAR and expect customers/investors to retain confidence in such an institution – simply because it says so?  

13. With the pronouncement from the CBN about an extension of the timeline for the AMCON – the market will likely take on a wait-and-see approach in Q3 akin to what it has done in H1 2010. How does that help?

 

Therefore, how does this latest pronouncement help address the confused state of the market? It looks as if the whole ‘reform’ process ended today. What we have is a confused state of affairs and there can be no better way of putting it.

 

We now seem headed on a course that simply provides direction as events unfold with the regulators/leadership not being in ‘control’ of affairs; most especially in an election year.

 

The talk about the proposed new banking model which would make banks to operate in the category of the minimum capital base they could raise, further confounds than clarifies.

 

Apart from GT Bank plc, all the banks that made public pronouncements, including getting their shareholders consent at their Annual General Meetings about their planned Bond offers have not made the decision to approach the market to date – perhaps as an indicator of the market conditions we alluded to here – FBN and the Planned Bond Offer – http://proshareng.com/blog/?p=31 – October 05, 2009.

 

See also the following: Corporate Bond Craze and Its Implications on Financial Institutions in Nigeria, Dr. Chukwumah Biosah, Monday, October 12, 2009 – http://proshareng.com/blog/?p=35 and New Bond Issues – Matters Arising, Olufemi Awoyemi September 30, 2009 – http://proshareng.com/blog/?p=20

 

Could it be that the opportunistic investments identified then turned out to be a mirage, does not exist anymore; or simply disappeared/evaporated?

 

The Declining Relevance of the Banking Sector in Economic Development

 

What is happening when institutions cannot raise equity from the capital market nor through bonds except government treasury bonds for a government seeking to raise money internationally itself?

 

Suffice to say, the relative importance of the banking sector to the Nigerian economy as an enabler of growth has been structurally devalued and its linkages with the rest of the economy weak/broken.

 

The banking sector has been de-linked in terms of materiality and output to such an extent that some investors/depositors find T/bills and Commercial papers in others climes more attractive at this time; currency risk factored in.

 

You simply have to take a look at all the key indices of economic linkages that existed before now – if the banks were not acquiring assets for branch expansions, they were renting buildings on long leases, engaging construction workers, taking up accommodations in hotels or investing/lending towards the constructions of new ones, booking airlines for local and international travels or advancing loans (now discovered to have been high risk), creating employment; and investing in technology. This is no longer the case.

 

Today, the total banking sector cannot stand the individual and collective worth and economic relevance of the following sectors/companies – Breweries (Nigerian Breweries Plc & Guinness Plc, Conglomerates (i.e. the Dangote Group), and the telecoms sector (i.e. MTN) in terms of Turnover, contribution to the economy and market value/EPS.

 

The banking sector has the cash but not the outlet for extending risk averse credits – there are simply, perhaps ironically, not enough blue chip firms and multinationals that is able to absorb the cash available to the banks. The depositors/savers are seeking security and higher returns for their cash and have limited options to do so. Where do we go from here?

 

Conclusion
 
The impact of the strong regulatory regime employed (an understandable position coming from the knowledge of how the system of patronage and circumvention of policy regimes work in Nigeria) has not, at this time at least, achieved or provided an indication of achieving, the desired goals.

 

Could it be a function of early days? As romantic as the prospects seem, economic realities are not known to be fond of romantic ideals. They exist and survive on the basis of impact and consequence.

 

The banking sector therefore, by this pronouncement from the CBN, is yet to get out of the unintended consequence of the intervention clearly.

 

Maybe, it is time we reconsider the approach to managing the economic implications of this developments. We are aware that the Minister of Finance and the CBN Governor spend considerable time reflecting on these issues and continue to seek the best for the country. Maybe, they should consider employing a more quantitative approach terms and not mere expression of a wish list and empathy towards the decline in growth, quality and relevance of the key indices of a sovereign state.

 

The question/issues we should now be focusing on is no longer about the banks and the banking sector, it is about the economy and the policies – monetary and fiscal that drive it on a consistent and quantitative manner for the benefit of the state and the citizens.

 

Can the Central Bank of Nigeria and the Ministry of Finance kindly step up to this compelling requirement?

 

Olufemi AWOYEMI, FCA

 

DISCLAIMER/ADVICE TO READERS:

While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the analyst or Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute our best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This publication is issued by Proshare Nigeria Limited www.proshareng.com and published with the consent of the author(s) for circulation to its online investment community in accordance with the terms of usage. Further enquiries should be directed to ceo@proshareng.com

http://www.proshareng.com/reports/2744

 

"The trouble, we are all learning – about financial regulation, by its nature, is that it can be a pretty abstract business. Here, good intentions count for very little. It is the impact of the action that ultimately matters and upon which people and systems are eventually judged" . – Olufemi Awoyemi, FCA in the article AMC – Thinking, Truth and the Trivial, December 30, 2009.

 

In reference to an earlier article I wrote in November 2009, titiled “AMC will not be a panacea for Nigerian Stock Exchange” – http://proshareng.com/blog/?p=58, I noted that the fortunes of the NSE will necessarily not turn around by just passing the AMC. A review of the current market climate indicates that my prediction appears to be materializing.  The downtrend of the NSE has continued in spite of the passage of the AMC. Additionally, a couple of weeks ago, the NSE regulators postponed the N1 Billion Naira capitalization requirement for stock brokerage firms in anticipation that the postponement will reverse the downtrend. It now appears that both of these measures have not had the impact the capital market operators and regulators had expected.

 

The Nigerian Stock Exchange started 2010 with a bang which appears to have run into significant head winds.  The NSE all share index attained its high of 28,029.78 on April 19, 2010, representing a $7,190.88, or 34.5% increase from its 2010 low of 20,838.90. Since attaining the high of 28,029.78, the NSE all share index has declined 2,274.17 or 8% through June 22, 2010.

 

I have observed four (4) technically problematic trends.  These trends are discussed below:

 

1) HIGHER LOW & LOWER LOW PHENOMENON:
Although the all share index has exhibited sporadic rallies since it started the current decline from the peak of April 19, 2010, each of such successive rally has failed to break above the previous high; thereby creating a high low technical phenomenon, which indicates a bearish trend and lack of confidence in the market by investors (see – b, c, & d as highlighted in the graph below).

 

Finally, a look last the most recent three (3) pull backs indicates (i.e., 1, 2 & 3) a lower low phenomenon which is very bearish. To break this trend, the current pull back must not fall below the last one (i.e., # 3).

 

2) INCREASED VOLUME ACCOMPANIED BY SUBSEQUENT SELL OFF
An important point that should be noted is that the climax of the NSE (28,029.78) on April 19, 2010 was driven by heavy volume. The traded volume for the 5 days prior to April 19, 2010 and on April 19, 2010 was 4.7 billion, the highest traded volume for any other period since January 1, 2010. Precisely, the traded volumes for April 12th, 13th, and 19th were 932 million, 996 million, and 967 million respectively. The increased volume (as indicated by “e: & “f” below) which were accompanied by subsequent sell offs, indicate that institutional investors probably sold into the peak. The trend has been downward since the climax as shown in the graph below:

 

3) DWINDLING DAILY VOLUME
Another worrisome trend is the dwindling volume at the NSE. The average daily volume is down 176% from its peak as shown in the graph below. Furthermore, the recent volume spike has been followed by a sell off.  For example, on June 16, 2010, 506 million shares were trade, but the NSE all share index closed down. Finally, some of the recent high volume traded stocks were stocks that I refer to as non-essential. On April 21, 2010, 349 million shares were traded at the NSE.  If you exclude 86 million Capoil shares, a penny stock trading at 0.51k, only 249 million shares were actually traded.

 

4) ALL SHARE INDEX BELOW ITS 20 AND 50 DAYS CUMULATIVE MOVING AVERAGES
The NSE all share index is currently trading below its 20 day and 50 day moving averages of 25,757.13 and 26,659.7 respectively. The Index initially dropped below these averages on May 21 and 24, 2010 respectively. On June 19, 2010, the all share index broke above the 20 day average indicating a short term reversal only to slip back below the average on June 21, 2010. Although the NSE all share index is trading above its 200 day moving average, the current all share index trading below the 20 and 50 day moving averages indicates short-term weakness.

 

Conclusion:
The direction of the NSE is currently uncertain.  Technically, it is not very promising. It appears that there is currently a capital flight from the market; judging from the dwindling daily volume trend. Even some of the large cap stocks have seen their volume dry up, or volume increased on sell off. A recommendation to remain on the sidelines until the indicators improve will not be out of place at this time.

 

REFERENCES:
1. The AMC may not be the final solution for the NCM!
http://proshareng.com/blog/?p=58

2. Asset Management Corp of Nig 2010 SB.359 – 310510
www.proshareng.com/reports/view.php?id=2705

3. AMCON: The journey so far
www.proshareng.com/news/11074  

4. Video: The AMCON Bill with Sansui Lamido Sansui – (Source: ABN Digital)
http://www.proshareng.com/video.php?vid=82

5. AMC – Thinking, Truth and the Trivial
http://proshareng.com/blog/?p=118

Prepared by Chukwumah Biosah, President CEBAL Audit Group, USA and InvestIQ, Technical Analysts to Proshare. All opinions on this page/site constitute our best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All enquiries should be directed to Biosah@ca.rr or info@proshareng.com

 

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