Nigerian Stock Exchange expected to continue strong rally through 2018

The Nigerian Stock Exchange (NSE) expects the strong rally that left the equities market with average gain of 42.3 per cent in 2017 to continue in 2018 as Nigeria’s macroeconomy improves.

Chief Executive Officer, Nigerian Stock Exchange (NSE), Oscar  Onyema, who spoke on the review of the market in 2017 and preview of 2018 at the Exchange in Lagos, noted that NSE recovered from the macroeconomic overhang of the commodity downcycle to become one of the best performing market in 2017 globally.

He said that the outlook for the Nigerian capital market was encouraging.

“Indeed, to some extent, political activities and currency movements will have some effect on the market, but we expect that such impacts will be short lived and the performance of the underlying business activities will ultimately determine market performance,” Onyema.

He noted that the NSE is on track to become a more agile and flexible demutualized securities exchange.

According to him, the Exchange is hopeful that the Demutualization Bill will be signed into law in 2018 while it has continued to work  assiduously with advisers to fine-tune outstanding aspects of the demutualization project as well as providing clarity and transparency on the process via regular engagement with all our valued stakeholders.

“In 2018, NSE will launch Exchange Traded Derivative instruments and continue to engage with the government on privatization and listing of state owned enterprises in collaboration with the private sector. We also plan to maintain our role as an advocate for the adoption and implementation of market friendly policies,” Onyema said.

He attributed the performance of the NSE in 2017 to Central Bank of Nigeria’s monetary policies that resulted in increased liquidity in the foreign exchange market.

He pointed out that the equity market activity skyrocketed from 2016 levels, as market turnover increased by 121 per cent to N1.27 trillion from N0.58 trillion.

According to him, while initial public offering (IPO) activity in the year remained mute, however, there were several other positive indicators including the revival of supplementary listings and the return of new issuances. The value of supplementary listings increased by 27 per cent, bringing the total value of equity issues in 2017 to N408 billion.

On bonds, Onyema remarked that the NSE fixed income market recorded mixed performance.

“New bond issuances increased over the previous year, while bond yields gradually moderated from 2016 levels amidst easing inflation and greater foreign exchange stability. Yields across various tenors declined between 0.4 per cent and 1.5 per cent, and market turnover declined by 24 per cent in 2017, as investors sought higher returns in alternative product classes. However, supplementary issuances by the Federal Government saw bond market capitalization increase by 34 per cent year-on-year,” Onyema said.

Read also: NSE LIVE! Nigerian equities net N2.17tr in 11 days

He noted that the NSE’s Exchange Traded Fund ( ETF) market witnessed increased activity across key metrics in 2017, recording a 272 per cent year-on-year growth in trade volumes, 33 per cent growth in turnover and a 40 per cent year-on-year increase in market capitalization to close the year at N6.69 billion.

He pointed out that the NSE also made steady progress on its strategic focus areas set out at the beginning of 2017.

“Demutualization remained a key strategic focus in the year under review. Through targeted engagement efforts with our members, Securities and Exchange Commission (SEC), the National Assembly (NASS), NSE members including Association of Stockbroking Houses of Nigeria (ASHON), Corporate Affairs Commission (CAC) and other key stakeholders, we achieved the broad-based support required to secure approval for demutualization from The Exchange’s members and successfully progressed the Demutualization Bill through the first and second reading and public hearing stages of the law making process.

“In 2017, we amplified our efforts to establish West Africa’s first derivatives market and achieved a number of key milestones during the year. These include the: (i) completion of draft rules; (ii) development of product specifications; and (iii) market-wide trainings on derivatives and Clearing Counterparty (CCP) transactions. We also worked to create and enhance legal and regulatory frameworks which support derivative instruments, and have made significant progress towards securing approvals to operationalize these frameworks,” Onyema said.

The NSE CEO said that in keeping with its objective of taking a vigorous and adaptive approach to strategy execution, the NSE re-assessed its strategic agenda in light of changing dynamics in both the operating environment and the global exchange landscape against the backdrop of the fourth industrial revolution. This culminated in a new corporate strategy for the 2018 – 2021 period.

“Our efforts will be geared at satisfying our customers, boosting our domestic retail segment, and enhancing our organization for a demutualized structure,” Onyema assured.

 

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