The Chief Executive Officer of The Nigerian Stock Exchange (NSE), Oscar N. Onyema, Monday presented the key performance of the Exchange in 2019 and gave a prognosis for the market in 2020.
The event themed: ‘2019 Market Recap and Outlook for 2020’ had in attendance the stockbroking community, analysts, media and other stakeholders.
Delivering his presentation, Onyema stated: “The Nigerian capital market mirrored the performance of the larger economy, which continued its moderate path of recovery, growing by 2.28% (Q3’19).
“The Nigerian bourse witnessed the impact of various factors including: a weak macroeconomic landscape; fiscal and monetary policy direction; underwhelming trends in Foreign Portfolio Investments; concerns around the stability of the naira and moderate corporate earnings. While these factors led to a negative performance in the equity market during the year, our Fixed Income market performed exceptionally well, reflecting a flight to safety.”
Key highlights of his presentation are as follows:
Global Capital Market
From an international investor’s perspective, the Nigerian bourse had to compete with developed and emerging capital markets which saw risk-based assets priced/valued more competitively. Capital conducive US Fed policy enabled foreign investors to economically enhance leverage and seek investment opportunities in their home and adjacent countries, necessitating Africa’s largest economy to adjust to new economic realities.
Product Performance
Although the Nigerian Stock Exchange’s All Share Index (ASI or All Share Index) posted a negative return of -14.60% to close the year at 26,842.07, the ASI reached a year-high of 32,715.20 in February 2019. Furthermore, the equity market capitalization increased by 10.55% to N12.97Tn from N11.73Tn in 2018, largely due to sustained primary market activities throughout the year, most notably the listings of MTN Nigeria Communications Plc and Airtel Africa.
To support the equity market in 2019, The Exchange rolled out various initiatives such as:
·a new market structure to enhance liquidity and ensure overall market stability alongside efficiency
·the launch of the beta version of the X-Mobile (a dynamic and user-friendly mobile app) to boost retail investors’ participation.
The fixed income market performed exceptionally well in 2019, as market capitalization increased by 20.42% to N12.92Tn from N10.72Tn in 2018. Turnover also increased by 389.26% when compared to 2018 although capital raising was dominated by the Federal Government, being responsible for 60% of bond issuances during the period in a bid to finance fiscal and infrastructure deficits.
Some of the ground breaking achievements for the year include:
·Listing of Access Bank Plc’s N15bn Green Bond, the first of its kind to be issued by an African corporate.
·Listing of North South Power Company Limited’s N8.5bn corporate infrastructure Green Bond, which was oversubscribed by 60%, with firm commitments from twelve institutional investors including nine pension funds. Capital raising by corporates increased by 321.61% with a total of N132.68Bn raised in 2019.
·The Exchange signed an MoU with the Luxembourg Stock Exchange (the largest Green Bond listing platform in the world) at the World Federation on Exchanges (WFE) conference held in Singapore. The MoU is geared towards promoting cross-listing and trading of Green Bonds in Nigeria and Luxembourg. Relationships of this nature will foster co-opetition, and further enhance the ability of The Exchange to deliver greater value to our stakeholders.
Strategic Performance across Business Development
The Exchange showed commitment to achieving its strategic objectives during the year under review. Some of the milestones achieved across business development were the launch of the:
· X-Mobile app to boost investors’ participation;
· Investor Relations data pack to enhance issuers’ stakeholders’ engagement;
· Mutual Fund Trading and Distribution Platform to enhance the retail customer experience;
· X-Academy e-learning to make quality learning accessible and affordable to individuals, corporations and institutions.
The Exchange recorded milestone listing of big corporates such as:
·listing of MTN Nigeria Communications Plc by introduction on the Premium Board;
·cross border listing of Airtel Africa on the Main Board, alongside London Stock Exchange;
· SAHCO Plc listing by IPO on the main board;
· launch of the Greenwich Alpha ETF focused on tracking the NSE 30 index.
Market Initiatives
The Exchange sustained its thought leadership and advocacy role in the capital market by:
· organising the first ever Hackathon designed to encourage Tech enthusiasts to develop innovative Fintech solutions;
· hosting two interactive sessions in the Insurance and Consumer Goods sectors;
· organising the Fixed Income Trading Workshop to enhance the capacity of dealing members;
· holding the inaugural edition of the Islamic Finance in Nigeria (IFN) Forum in partnership with REDmoney Group.
Corporate Citizenship Development
In upholding its key pillars of sustainability, The NSE:
- Joined The World Federation of Exchanges (WFE) and International Organization for Securities Commission (IOSCO) in the inaugural “Ring the Bell for Financial Literacy” initiative, to draw attention to the importance of financial literacy
- Partnered several organisations in key areas of environmental responsibility including Recycle points and the Mental and Environmental Development Initiative for Children (MEDIC) on critical initiatives.
- Launched the Facts Behind the Sustainability Report (FBSR) and the Sustainability Disclosure Guidelines to promote Environmental, Social and Governance (ESG) practice and reporting
- Recorded 40,966 entries in its annual essay competition, marking a 100% increase from the 20,016 essays received in 2018 and the highest number of essays recorded in the 19 years’ history of the competition.
- Appointed Tuface Ujah Idibia as our Good Cause Ambassador to help in raising awareness and mobilizing support for the CSR initiatives of The Exchange.
- The Exchange was honoured with the Best Corporate Social Responsibility Initiative Award at the Marketing World Awards and also won the Outstanding Invaluable Company for CSR from Rotary International.
Outlook for 2020
Presenting The Exchange’s efforts in 2020, Onyema said, “The year 2020 has started on a good note, with the NSE ASI recording a 9.41% improvement year-to-date as at January 10. We intend to work closely with our stakeholders to sustain this growth trajectory. As African Champions, we will maintain momentum in executing the NSE’s 2018 – 2021 Corporate Strategy in our efforts to elevate the prominence of Africa’s global financial markets.”
In its aspiration to become a more agile and demutualized exchange, and pursuant to the SEC’s ‘No Objection’ rule, The Exchange will proceed to next steps which include seeking formal approval from its members on demutualization Scheme. While keeping an eye on the strategic intent post-demutualization, The Exchange commits to leveraging its vast network of stakeholders, in addition to developing new strategic partnerships to deliver better products and services to the investing public.