Following the quest by the Nigerian Stock Exchange (NSE) to deepen market value by way of introduction of new products, Afrinvest West Africa Limited has called for an effective regulation oversight to enhance their acceptability.

Afrinvest stated that policies such as the introduction of market making, securities lending, short selling and Exchange Traded Fund (ETF’s) needs to be accompanied with effective regulatory oversight, while their general acceptance and participation by the investing public will largely depend on improved investor education.

In the Afrinvest 2012 Nigerian market outlook “Diamond in The Rough”, the company pointed that in the last one year, the Nigerian stock market had undergone wide-ranging regulatory and “housekeeping” reforms and initiatives that were geared towards restoring investors’ confidence in the Nigerian bourse.

It will be recalled that the listing of ETF is expected to help develop the investors market in the domestic economy by widening the choice of asset classes available to local investors. Furthermore, the product is expected to inject further liquidity into the NSE over time.

Afrinvest believes that the factors that influence investors’ confidence in the market transcend macroeconomic and socio-political considerations.

 “The need to capture a significant portion of emerging market portfolio inflows necessitates a quantum leap in regulatory and administrative oversight, including high corporate governance standards, on the Nigerian bourse in line with acceptable global standards.”

The company revealed that having initiated varied reforms, which were targeted at enhancing fair and transparent market place, enhanced investors” confidence, and improving market depth, the bourse was on course for boosting investors’ confidence.

However, the company, estimated a GDP growth rate of 7.0 per cent and 7.5 per cent for the country’s economy in 2012 with increased contribution from the non-oil sector especially agriculture, telecoms and financial services.

“We expect the CBN’s banking sector reforms to berth in 2012, giving further impetus to bank lending particularly given the mild uptick in credit growth observed towards the end of 2011. We envisage less aggressive fiscal tightening measures in 2012 even as reduced government borrowing should bear positively on the domestic equity market.”