Salami To Stock Brokers: Innovate To Stay Afloat

Chairman of the Economic Advisory Council, Prof. Adedoyin Salami, says stockbroking firms in Nigeria need to move beyond concentrating on equity, conducting stock sales and purchase to being more innovative to remain relevant in the current global economic climate.

Salami said this while delivering the keynote address at the annual retreat and strategy session of frontline broking firm, Globalview Capital Limited, which held in Lagos on Saturday.

According to him, the capital market may soon experience some form of turbulence, especially with the precarious state of the global economy, the reversion of liquidity provision policy for the Nigerian market, the tightening of monetary conditions and the increase in bank interest rates.

He noted that the capital market faced a huge risk as 45 per cent of portfolio investors were foreigners while 55 per cent were indigenous.

Salami added that the top 10 domestic brokers controlled well over 40 per cent of the indigenous market share, leaving the remaining for over 200 firms to grapple with.

He said, “What you would expect to see now is that anybody who is risk-averse will opt out of the market and go and sit down with the banks.

“Note that companies are using equity to trade if you are on the equity side. They are all facing real problems: the margins are contracting and so, as the lawyers say, ‘you cannot build something on nothing’.

“If corporate profitability is shrinking, then equity market outcomes are not anything spectacular. Where you are now is a dying space.”