The Nigerian Stock Exchange (NSE) has been urged to review the current listing and post-listing requirements of the Exchange and create a mechanism that will allow free entry of new companies into the Exchange and free exit of existing ones.
An Investment analyst and Managing Director, Cowry Asset Management Limited, Mr. Jonson Chukwu, who made the appeal in a chat with Leadership, said there was also the need to create incentives that would attract companies to be listed on the NSE.
Chukwu noted that for the Exchange to become a world class one, it must continue to develop the market in such a way that it would enable companies to embark on cross boarder listing.
He lamented that there was no company privately listed outside the country that is list in the NSE where as Nigerian companies have been listing in other Exchanges of the world.
“ Today, we don’t have any company that is privately listed outside the country that is listed in Nigeria, but our companies are going to list outside. We are only seeing cross boarder listing.
“Oando is presently listed in South Africa, the company decided to list in South Africa because of the benefits of listing in South Africa. We should develop our market in such a way that even foreign companies would have the need to be listed in our local market,” he said.
Chukwu, who express his disagreement with the notion that the delisting of some companies like the Nigerian Bottling Company (NBC) from the NSE would set a bad precedent for other multinationals listed on the NSE, said, “Each issuer or company has its own corporate strategy.
“That NBC wants to remain a private limited liability company means that they may have several reasons for that, but that will not affect what happens to Nestle or Cadbury, the key thing is for us to continue to develop our market to accommodate cross boarder listing.”
He explained that the major factor that was compeling multinationals to exit from the market and inhibits new ones from being listed is pricing mechanisms.
He pointed out that pricing mechanisms on the NSE have become so weak in the last three years, noting that most stocks has become under valued that they could no longer reflect their intrinsic worth.
“For such companies that are international institutions, when they value their investment in Nigeria, their market value seem to be lower than the intrinsic worth of those companies. So the market should correct itself because other Exchanges have corrected this and we should have transparent and easy to enforce listing and post listing rules,” he said.