Viewed from whatever perspective, the year 2010, could best be described as unrewarding for operators and players in the nation’s capital market, no thanks to the impact of the global financial meltdown that brought down the value of  stocks.
Today most of the stocks listed on the exchange have become “penny stocks” as most of them are trading far below the value they represented in the boom days of 2005 to 2008. Strangely, despite the sinking value, the companies have been declaring huge and appetising bonuses and dividends. This is what separates the Nigerian Stock Exchange from other markets in other parts of the world.
The sluggish performance of stocks quoted on the NSE stemmed from the different sectoral reforms especially the Capital market, Insurance, banking, Pension Commission (Pencom), Asset Management Company of Nigeria (Amcon) and so on. The NSE has reflected the impact of the tightening in liquidity and the drying up of interbank lending on banks. The liquidity squeeze has greatly constrained the market as many people who would have loved to take advantage of the low value of stocks cannot do so because of lack of funds. The impact of the recent Central Bank of Nigeria (CBN) stress tests for banks has continued to reverberate in the market.
The banking sector is very significant to whatever happens in the market. This is not surprising as 70 per cent of the market volume is controlled by the sector. 
Ten of the 20 biggest companies on the NSE are banks and this 10 account for 45 per cent of market capitalisation. 

Some of the Reforms that may lead to investors’ delight
No doubt, Amcon is one important element of market recovery. Twenty banks have transferred their non-performing loans to Amcon in exchange for N1 trillion in bonds t at a recent event in Lagos.
The event, which held at the law firm of Olaniwun Ajayi & Co, legal advisers to the Amcon, was graced by Olusegun Aganga finance minister and Lamido Sanusi the governor of Central Bank of Nigeria.
Mustafa Chike-Obi, Amcon CEO, disclosed last week that one bank has yet to submit its toxic assets portfolio,  while Standard Chartered Bank and Nigeria International Bank (Citigroup) said they have no bad loans to hand in.
Only the banks the CBN assisted last year are under obligation to submit their bad loans to the Amcon, but as Chike-Obi puts it, buoyant banks also have an opportunity to offload problematic loans.
The Amcon will hold on to the shares of quoted companies used as collateral by the original borrowers, which would be presented in exchange for the bond with sovereign guarantees. 
While this makes the asset management company a shareholder in the affected banks, there should be no rush to offload the shares thereby flooding the market again. The share certificates will be held for a minimum two years before sale is contemplated.
Chike-Obi said the Amcon has stabilised the stock market, as it continues to restore investor confidence as seen in the past few weeks.
But, to him, the most important stakeholder is the tax payer who provided the funds for the intervention in the financial system.

Expert upbeat on market return
In his  view, Mr. Matthew Ogagavworia, a stockbroker trading for Bgl Securities said: “We expect the recovery of the market to deepen in 2011 fuelled by Amcon toxic loan buys, successful conduct of elections, sustained recovery of world economies, expected foreign direct investments encouraged by relative peace and stable political climate, capital market regulation boosting investors confidence leading to the come-back of investors to the market, a resolution of the CBN - rescued banks issues. In fact, the market will bounce to reckoning and enjoy its enviable position of growing wealth”
On regulators, Ogagavworia advised the Securities and Exchange Commission (Sec) to increase its regulation of the market and enforce its rules.
Similarly, since Amcon will commence toxic assets purchase from deposit money banks in line with its mandate, its activities will increase credits to the banks for onward lending to the economy, increase in financial instruments as bonds are issued to some of the banks who may avail themselves of its window, he said.
Kasimu Kurfi the managing director and chief executive officer of APT Securities and Fund Limited said  the ongoing reform in the Exchange and the banking sector will make 2011 a better year. He based his optimism on the present low pricing of stocks which he believes would hold major attractions for cautious investors.
According to him, “Although our market closed positively in the year 2010 but price of quoted securities were still low; some are 80 per cent below their April 2008 price.
We have seen improvements in companies’ profits; banks are declaring exactly what their provisions are rather than what most consider as fictitious figures in their books”
He affirmed that with the reform investors would have all available information to work with and properly evaluate any prospective investment before making financial commitments.
He advised investors to take position on stocks now especially in the banking sector. “We believe the banking sector may likely issue bonuses to meet up the recapitalisation exercise as stipulated by the Central Bank of a minimum of 50 billion fully paid for international, N25 billion for national and N10 billion for regional banks. Most of these banks are currently far below the threshold required for their operation in the emerging regime. Therefore we advise investors to look into that.”