STOCK MARKET INTEGRATION: AN EVALUATION OF THE IMPACT OF EMERGING AND DEVELOPED STOCK MARKETS ON THE NIGERIAN STOCK EXCHANGE.

Over the past few decades, the world stock markets have surged and emerging markets have accounted for a significant part of the boom (Yartey and Komla, 2007). In Nigeria, following the deregulation of the capital market in 1993, the Federal Government in 1995 internationalized the capital market with the abolition of laws that constrained foreign participation in the Nigerian capital market. There are now no limits to the extent of integration between Nigerian economy and foreign economies. In recent times, Nigeria has also moved towards integrating her stock market with other African and Global exchanges (ANDnetwork, 2006).
In the 1980s, many emerging markets’ opened their stock market to foreign investors. By the 1990s, most of these countries in Asia, Latin America and Russia faced severe financial crises (see Yang et al, 2002 for instance on stock market integration and financial crises: the case of Asia). These events have helped in stimulating a debate about the benefits of stock market integration and more generally the debate about the benefits of globalization (see Stiglitz, 2002).
While the Investment and Securities Act of 1999 Part II, 8(i) and 8(j) provides institutionalize support for market integration in Nigeria (see Appendix (B) for an extract of the Act), the Pensions Act 2004 on the other hand, provides institutional backings for investing Pension Funds in the Stock market (see also Appendix (B) for an extract of the Act). The pension reform Act has the potential of making the stock market to house a huge chunk of the nation’s wealth. The investment and securities Act of 1999 in institutionalizing market integration in may expose the Nigerian capital market to contagion.