Earlier this week, the Chief Government Officer of the Nigerian Inventory Change (NSE), Oscar N. Onyema offered the important thing efficiency of the Change in 2019 and gave a prognosis for the market in the New 12 months 2020. The occasion had in attendance the stockbroking neighborhood, analysts, media and different stakeholders.
Through the yr 2019, the efficiency of the Nigerian capital market mirrored that of the bigger financial system, which continued its average path of restoration, rising by 2.28p.c in the third-quarter (Q3).
The tempo of the Nigerian financial system remained fragile because the financial system continued to develop under inhabitants development, resulting in per capita revenue and unemployment challenges.
From a world investor’s perspective, the Nigerian bourse needed to compete with developed and rising capital markets which noticed risk-based belongings priced and valued extra competitively.
Within the evaluation yr, investors contended with: the macroeconomic panorama; fiscal and financial coverage path and; a wait-and see perspective given traits in Overseas Portfolio Investments (FPIs).
Regardless of welcomed stability in the FX market because of the CBN’s intervention, considerations across the stability of the Naira remained prevalent. With reference to company efficiency, their earnings had been average as at first-half (H1) 2019.
These aforementioned elements impacted the fairness market negatively in the course of the yr 2019, nonetheless the Mounted Earnings market carried out exceptionally properly in 2019, reflecting a flight to security.
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NSE fairness product efficiency
Though the Nigerian Inventory Change’s All Share Index (ASI or All Share Index) posted a unfavorable return of -14.60p.c to shut the yr at 26,842.07 factors, the ASI reached a yr excessive of 32,715.20 factors in February 2019.
Moreover, the fairness market capitalisation elevated by 10.55p.c to N12.97trillion from N11.73trillion in 2018, largely as a consequence of sustained main market actions all year long, most notably the listings of MTN Nigeria Communications Plc and Airtel Africa.
NSE indices additionally posted unfavorable returns in the course of the yr with the NSE Shopper Items Index being probably the most impacted, declining 20.83p.c, adopted by the NSE Predominant Board Index and NSE Lotus Islamic Index, which dropped by 20p.c and 17.87p.c respectively. The NSE Insurance coverage Index and the NSE Premium Index had been the least impacted, declining by 0.52p.c and three.59p.c respectively.
Fairness market turnover decreased by 19.70p.c year-on-year (YoY) from N1.2trillion recorded in December 2018 to N960billion in December 2019. The Monetary Companies Sector which accounted for over 50p.c of complete exercise remained the very best traded in quantity and worth, as was the case in 2018.
To assist the fairness market in 2019, the NSE rolled out numerous new initiatives akin to a new market construction to boost liquidity and guarantee total market stability alongside effectivity, in addition to launched the beta model of the X-Cellular App (a dynamic and user-friendly cell app) to spice up retail investors’ participation.
NSE Mounted Earnings Product Efficiency
Our mounted revenue market carried out exceptionally properly in 2019, as market capitalisation elevated by 20.42p.c to N12.92trillion from N10.72trillion in 2018. Turnover additionally elevated by 389.26p.c when in comparison with 2018. Capital elevating was dominated by the Federal Authorities, being accountable for 60p.c of bond issuances in the course of the interval in a bid to finance fiscal and infrastructure deficits.
The yr 2019 noticed the groundbreaking itemizing of Entry Financial institution Plc’s N15billion Inexperienced Bond, the primary of its variety to be issued by an African company. The market additionally noticed the itemizing of North South Energy Firm Restricted’s N8.5billion company infrastructure Inexperienced Bond, which was oversubscribed by 60p.c, with agency commitments from twelve institutional investors together with 9 pension funds. Capital elevating by corporates elevated by 321.61p.c with a complete of N132.68billion raised in 2019.
Along with these accomplishments, the Change signed an MoU with the Luxembourg Inventory Change (the most important Inexperienced Bond itemizing platform in the world). The MoU is geared in the direction of selling cross-listing and buying and selling of Inexperienced Bonds in Nigeria and Luxembourg. The NSE believes relationships of this nature, which foster competitors additional enhances its capability to ship higher worth to our stakeholders.
NSE ETP product efficiency
The Change Traded Fund (ETF) market noticed the itemizing of Greenwich Alpha ETF from Greenwich Asset Administration Restricted which tracks the NSE 30 index. Regardless of the 61.37p.c YoY decline in commerce volumes, 46.43p.c fall in turnover, there was a 7.43p.c YoY improve in market capitalisation to shut the yr at N6.58billion. The very best performing ETF was the NEWGOLD ETF because it returned 31.75p.c indicative of the shift in the direction of extra secure funding securities.
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Additionally, to optimise investors’ returns, the Change partnered with Afrinvest Securities Restricted to launch two new issue indices; the NSE-Afrinvest Banking Worth Index and NSEAfrinvest Excessive Dividend Yield Index. Equally, it partnered with Meristem Securities Restricted to launch the NSE-Meristem Development Index and NSE-Meristem Worth Index to offer a benchmark for the market to gauge the efficiency of worth shares and development shares listed on The Change.
Securities Lending/ Investor Safety
The Change labored with securities lending brokers to develop a securities lending pool at the moment value about N1.07billion. It additionally sensitised stakeholders on the probabilities that abound with securities lending. Pursuant to the Change’s strategic concentrate on Investors Safety, the NSE facilitated restitutions and recoveries of shares value N1.436billion for investors in 2019.
“The Change confirmed dedication to attaining its strategic goals in the course of the yr beneath evaluation. We targeted on our key targets to proceed to execute on the NSE’s 2018 – 2021 Company Technique, inclusive of restructuring the group, onboarding new monetary devices and growing the market, in addition to specializing in buyer centricity. A key facet to our Imaginative and prescient of turning into Africa’s Most popular Change Hub is to efficiently demutualise the organisation.
“Having met the necessary requirements of the Securities and Exchange Commission (SEC), The Exchange has obtained a letter of ‘No Objection’ to enable us proceed to the final stages of the demutualisation process. We have also sensitized our stakeholders on the process of demutualization and will continue engagement throughout the process. In anticipation for derivatives trading on The Exchange, the NSE released a derivatives market rule book that will serve as a guide for trading derivatives on the bourse”, stated Oscar Onyema, CEO, NSE.
The outlook for 2020
The yr 2020 has began on a good observe with circa 10p.c returns year-to-date (ytd). The NSE stated it intends to work carefully with its stakeholders to maintain this development trajectory.
The NSE CEO is optimistic that market sentiments might be buoyed by a regular and secure restoration in the home financial system, alongside continued sustainability in financial coverage.
“The signing into law of Nigeria’s Finance bill 2019 and implementation of the 2020 budget may have a positive impact on companies’ earnings as well as consumer spending”, he added. Accordingly, the Change stated it should proceed to advocate for business-friendly financial surroundings, working in conjunction with each the Public and Personal Sectors.
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