The debilitating impact of recession on disposable income of average Nigerian retail investors has been described as one of the major issues that could frustrate some rights issues in the capital market.
Cross= section of market stakeholders and retail investors who spoke to Daily Times Nigeria, said that more Nigerians are now impoverished than ever to afford food for their families than to think of buying shares.
Chairman Standard Shareholders Association of Nigeria, Mr. Godwin Anono, speaking to daily Times Nigeria during in an interview, said, “There is nothing to eat, talkle of investing in right issues.”
He said that while some companies that are currently floating rights issues may have some foreign investors behind them, it may be more surprising for them to see that most Nigerian retail investors may not take their rights because of the harsh economic situation, and they may end up disappointed at last.They may be disappointed because
they will not see retail investors to support them.”
According to him, most rights currently in the market are of premium; and may not be feasible for retail investors who have been constrained by poor performances of most stocks in the market and the near absence of dividend payment.
“If you look at it, the amount you invest and the dividend you receive at last may not worth any sacrifice for the retail investor. Most of whom have been selling even at loss to feed their children” Anono said.
According to him, members of his group are no longer as enthusiastic they used to be about the equities market, but not burdened by challenge of meeting their family’s essential needs.
“Previously, I must buy shares every week, but what I do now, like every other retail investor in my association, is looking for how to put food on the table for my family. It is someone that eats well will think of buying shares.”
He said that many of the retail investors in the market who are expected to take their rights are currently saddled with the challenge of paying their children school fees , as “there is no money, many of the parents are now changing schools for their children for affordable school fees, if you buy shares and the price is not growing and no dividend is paid, you don’t mind selling at loss.”
The Standard Shareholders Association chairman said that the current nature of equities in the market gives no comfort for a retail investor struggling under austere economy “in the market now, you no longer sees stocks that are not on bid, all the stocks are available for sale”
On his part, Mallam Shehu Mikhail of Constance shareholders Association of Nigeria said that it would take a retail investor that has relationship with people in government to buy rights under challenging economic condition.
He said that though when offers are cheap, they tend to be appealing to investors, but there has not been funds to do experiment with.
The stand of Anono and Mikhail were also corroborated by many retail investors who spoke to Daily Times.