Mr Temi Popoola, Chief Executive Officer (CEO) of the Nigerian Exchange Ltd. (NGX), says the nation’s bourse aims to drive more technology companies to the Exchange and deepen capital formation in the sector.
Popoola said this at the presentation of the NGX 2022 Market Recap and 2023 Outlook held virtually on Wednesday in Lagos.
He said that the NGX Technology Board listing rules were approved by the apex regulator, the Securities and Exchange Commission (SEC) in December 2022.
The CEO said, “Currently we are in consultations with stakeholders in the sector and we are confident of securing a few big names within the year.”
On strategic partnerships, Popoola said that NGX would be forging more with development finance institutions, banks, both local and international, to further develop the market.
He also said that the management of NGX planned to do more on trading to improve data dissemination and attract a larger investor base, especially from the retail side.
Popoola emphasised that the Exchange would be using listings as a vehicle for meeting strategic aspirations as the new dispensation comes in through increased advocacy and engagements.
“NGX sees sustainability as not just important but also a profitable frontier of its business and work is ongoing on developing a framework for certifications in carbon credits trading, pending regulatory approval.
“On the capital market’s digital transformation, the Exchange is working on USSD launch in collaboration with Telecommunications, banks; unlocking the African Capital markets via payment integration with Afreximbank’s Pan African Payment Settlement System.
“Altogether, 2023 is likely to be a new dawn for the market and the Nigerian economy as significant events take shape in the macroeconomic and political environments,” he said.
On the review of the exchange, the NGX boss said it made a strong showing with its performance in 2022, as it recorded landmark transactions.
Popoola said, “In 2022, the equities market performance was evidenced by the 19.98 per cent increase in the NGX All-Share Index, which rose from 40,270.72 points to 51,251.06 points, just as the market capitalisation also closed at a high of N27.92 trillion, up from N21.06 trillion in 2021.
According to him, the total turnover of trades in 2022 improved by 27 per cent from N916 billion to N1.16 trillion year-on-year from 2021, while market participation was heavily skewed to the domestic investors.
The Fixed Income market saw a slight uptick in turnover to N3.89 billion in 2022 from N3.53 billion recorded in 2021.
This represents a 10.20 per cent year-on-year increase.
The NGX boss said the Exchange Traded Funds market capitalisation increased from N7.35 billion in 2021 to N8.42 billion in 2022, representing a 14.56 per cent increase in the market capitalisation.
“Stanbic IBTC ETF 30 which tracks the performance of NGX 30 index was the best performing ETF in 2022, having began the year at N68.5 and closed at N245, reflective of 257.66 per cent returns.
“ETF transactions fell from N34.22bn in 2021 to N211.02 million in 2022. This represents a 99.38 per cent decline in ETF turnover.
“Altogether, this signalled a good year for the Exchange despite global macroeconomic headwinds,” Popoola added.
On Listings, the CEO said that the yearly performance can be attributed in part to the N4.3 trillion in listings recorded by NGX across Equities and Fixed Income markets.
These listings include the raising of N2.54 trillion of bond listings for the Federal Government of Nigeria, as well as equity listings totalling N1.35 trillion from companies such as BUA Foods Plc and Geregu Power Plc.
Corporate bond listings also contributed significantly to the Exchange’s performance, with a total of N364.78 billion raised through listed instruments.
They include Dangote Industries Plc’s N177.12 billion senior unsecured bonds, Lagos Free Zone Company SPV Plc’s N25bn fixed rate infrastructure bonds and Ardova Plc’s N11.44bn and N13.86bn fixed rate senior unsecured bonds.
NGX also listed FGN Multi-Tranche $4 billion eurobonds which further demonstrated its diversity of offerings and its ability to attract a wide range of businesses looking to raise capital.
The value of these listings displays NGX’s commitment to positioning itself as a premier location for capital raising and formation, as well as its ongoing development efforts in the Nigerian capital market post its demutualisation.
The Managing Director-Head of Strategy at EFG Hermes Research, Mr Simon Kitchen, advised the incoming administration to ensure that MSCI, the frontier index provider, does not remove Nigeria from its index.
The MSCI Frontier Markets Index captures large and mid-cap representation across 28 Frontier Markets (FM) countries.
The index includes 96 constituents, covering about 85 per cent of the free float-adjusted market capitalisation in each country.
Kitchen said that the MSCI had been considering whether to remove Nigeria from its frontier index for some months now but deferred the removal until June 2023.
He suggested that the incoming administration would have to address the issue frontally.
“The new government in the first half of 2023 should ensure it solves the currency issue to prevent Nigeria from being removed from the frontier index, to create more inflow in the Nigerian stock market from foreign investors because right now the inflow is limited,” he said.
