The Nigerian Stock Exchange (“NSE” or “The Exchange”) held its 2017 Market Recap & Outlook for 2018 on Tuesday, January 16, 2018, at the Stock Exchange House, Lagos. This annual event is a forum for the Chief Executive Officer of NSE, Mr. Oscar N. Onyema, OON, to brief the stockbroking community, analysts, media and other stakeholders, on the performance of the market in the preceding year and give prognosis for the market for the new year, 2018.
In his presentation, Mr. Onyema noted that NSE recovered from the macroeconomic overhang of the commodity downcycle to become the third best performing market in 2017 globally, with a 42 percent return in the NSE ASI index. He attributed this performance, in part, to Central Bank’s monetary policies that resulted in increased liquidity in the foreign exchange market.
According to Onyema, the equity market activity skyrocketed from 2016 levels, as market turnover increased by 121% to N1.27 trillion from N0.58 trillion. He stated that “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%, 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 FX stability. Yields across various tenors declined between 0.4% and 1.5%, and market turnover declined by 24% 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% year-on-year”.
“The NSE’s ETF market witnessed increased activity across key metrics in 2017, recording a 272% year-on-year growth in trade volumes, 33% growth in turnover and a 40% year-on-year increase in market capitalization to close the year at N6.69 billion” he added.
Onyema also noted that NSE 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”, he said.
In keeping with its objective of taking a vigorous and adaptive approach to strategy execution, Onyema stated that 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”.
Speaking on the prognosis for 2018, Onyema noted that the outlook for the Nigerian capital market is 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”.
On its part, the NSE is on track to become a more agile and flexible demutualized securities exchange. “We are hopeful that the Demutualization Bill will be signed into law in 2018, and are working assiduously with our 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”.