Demutualisation will activate idle capital, catalyse growth — Kurfi

As the demutualisation process of the Nigerian Stock Exchange (NSE) nears completion, the Managing Director (MD) of APT Securities and Funds Limited, Mallam Garba Kurfi, said the exercise will boost economic activities and activate idle capital in the market.

Mallam Kurfi who expressed this position in his speech at the Capital Market Correspondents Association of Nigeria (CAMCAN) first quarter forum in Lagos, explained that demutualisation would reactivate idle capital in the market, thereby boosting economic activities.

He said, “It is a good thing and all of us are going to be happy at the end of the day because it is going to unlock more capital for the market.

“For instance, if I place shares as collateral, I can trade and make money. We are pleased this is coming after so much delay. This will change the economy’s perspective as well. My only worry is that we are slow starters, and we need our regulators to wake up to their responsibilities.

He added that, “The issue of demutualisation started many years ago but we are still talking about it in 2020. It is already a history in Nairobi-Kenya. However, it is better late than never. If NNPC and LNG eventually get listed on the exchange, it will make more dead capital alive.”

While giving insights to performance of the market in 2019, the investment expert explained that the performance of the market on quarterly basis was the worst in the last 10 years with negative returns in all the quarters.

He, however, attributed the performance to the tensed polity in the build up to the 2019 elections that dampened investors’ confidence.

On market outlook, he projected that the market was expected to close in double digits by the end of 2020.

Kurfi further said, “The All Share Index is likely going to close for the year 2020 in positive and may close in double digits. Both technical analysis and fundamental analysis move to the positive direction.

“However, the market may experience volatility because of the changes in the reporting financial reports as adopted by the exchange without adequate awareness of the brokers. Also, I foresee banks unlikely to make profits like they did in 2019 because they are pressured by the Central Bank of Nigeria (CBN) directive to meet up 65 per cent Loan to Deposit Ratio (LDR).”

According to him, the recent review of Cash Reverse Ratio (CRR) from 22.50 per cent to 27.50 per cent would redirect funds into the stock market.

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