Access to CNN, Internet led to stock market crash" –Okereke-Onyiukeby Obinna Ezeobi of The Punch newspaper, July 20, 2009

Source: http://www.punchng.com/Articl.aspx?theartic=Art200907200152971A fresh but curious reason emerged on Friday on why the Nigerian Stock Market crashed.Director-general, Nigerian Stock Exchange, Prof. Ndi Okereke-Onyiuke, attributedthe crashessentially to the exposure of many Nigerian investors to international news channels and theInternet.Okereke-Onyiuke, who also described the NSE as the second best in the world, mentioned theCable News Network, the Consumer News and Business Channel (CNBC) and Bloomberg as suchnews channels.She explained that Nigerians who had access to the Internet and watched the effects of theglobal financial meltdown in the developed economies via those news channels she listed,panicked and subsequently dumped their shares.Okereke-Onyiuke said these at the capital market stakeholders’ luncheon for the 2009convention of Association of Nigerian Physicians in America in Abuja on Friday.According to her, unlike what transpired in the developed economies, the fundamentals of companies quoted in the NSE were strong and the companies were still operating, declaringprofits and paying dividends.She said, “Why our market went down was not because the fundamentals were not there. Itwas because Nigerians are now exposed to CNN, the Internet, CNBC, Bloomberg and as theywatched, they panicked.“They watched what was happening in the rest of the world and they panicked and starteddumping shares.“Our own market is different. In the United States where it (meltdown) started, thecompanies got broke and were liquidated. They filed for bankruptcy and the managers wereremoved.“In our own case, the companies are very much there, the managers are there and thefundamentals of the quoted companies are still strong and solid; no factory got burnt and nomanager got removed and none of them is bankrupt.“What is wrong with our market is not the global meltdown. It is ‘global panic’ and we aretrying very hard now to rebuild the confidence of investors to come back into the market.”Okereke-Onyiuke, however, explained that the value of the stocks had maintained a steadypath to recovery, adding that they were not likely to jump to where they were before.

“It will rebound slowly because it also went down slowly,” she said.The DG further stated that at the peak of the global financial meltdown, the NSE lost about40 per cent of its value as the total market capitalisation declined from N12tn in 2008 toN7.14tn in March this year.She, however, explained that many of the investors that sufferedlosses only lost in terms of value. Their holdings are still intact.“What you have lost is the value of the stocks temporarily because the companies are stillthere making money. The stock market is a cycle. If the market builds up again, you will beable to sell if you want to or keep it for your retirement.“It must be stated that even most of those who lost had earlier made huge profits in form of capital appreciation, dividend and bonuses and built houses.“People forgot that they have already received appreciation, dividend and bonuses and thatpercentage they have is what lost value.“As investors’ confidence begins to rise, our market capitalisation is equally rising. Itappreciated from N7.14tn to N9.45tn between April and May this year.“Today, itis hovering above N8tn as many of our customers are taking profit regularlyfollowing market dynamism. Our market is resilient. We did not apply any stimulus.”Okereke-Onyiuke also noted that the crash of stock prices presented an opportunity toinvestors.She said, “The market is rebounding so this is the best time to buy. You can mop up a lot of shares and get on the board of some companies whose shares are low at the moment.“If you look at history, the trend, this is the first time in the history of the NSE that the stocksare down. It is cyclical market.”But despite the crash in the price of stocks in the Nigerian market, Okereke-Onyiuke insistedthat the NSE was currently the second best exchange in the world.According to her, “We are in the top five in the world. We have climbed to number two thisyear because a lot of the developed markets have not started rebounding. The ratings aredone every six months.“Until the market downturn, we had always out-performed many developed markets in theareaof Return on Investment in US dollar terms as adjudged by the International FinanceCorporation and Standard and Poor’s, an international rating agency. Our market will soonsustain this high performance.”Some experts, however, disagreed with Okereke-Onyiuke on the reasons for the crash of thestock market.