NGX Must End ‘Listing by Introduction’ to Boost Transparency and Investor Confidence
Nigeria’s capital market is at a crossroads as investors and experts increasingly question the practice of listing companies by introduction on the Nigerian Exchange (NGX). Unlike traditional listings that raise capital and establish a competitive price, listing by introduction allows companies to appear on the exchange at an assumed price, often disconnected from market demand. Critics say this undermines the core purpose of a public market: transparent price discovery.
Listing by introduction also deprives investors of the opportunity to engage with management and understand the company’s strategy and risks. Without formal disclosures or investor relations engagements, stocks often lack liquidity and may drift into irrelevance. Observers argue that this silent approach diminishes confidence in the market and creates an uneven playing field for companies that undergo rigorous capital-raising processes.
Beyond the listing method itself, the NGX faces a broader structural challenge: the lack of minimum investor relations standards. Many listed companies remain difficult to reach, with no dedicated contact points or accessible information. Experts advocate for mandatory quarterly presentations, annual investor calls, and local roadshows to ensure management communicates performance and strategy directly to shareholders. This transparency, they argue, is essential for informed investment decisions.
Weak investor relations have a direct impact on valuations. When information is scarce, uncertainty rises, often resulting in undervaluation of companies. By enforcing consistent disclosure and engagement, the NGX could strengthen governance, reduce surprises, and align management with shareholders’ interests, contributing to a healthier and more credible market environment.
Ultimately, the call to discontinue listing by introduction is framed not as a radical change but as a necessary step for Nigeria’s capital market to earn trust and attract both domestic and global capital. Experts emphasize that transparency, consistency, and proactive engagement are not optional—they are fundamental for building liquidity, long-term credibility, and a robust financial ecosystem.
source: nairametrics