The Federal Government due to the paucity of funds and in its bids to finance fiscal and infrastructure deficits in the domestic economy raised a total of N1.6 trillion from the capital market in 2018, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema has disclosed.
This resulted in the NSE fixed income market and market capitalization to increase by 11.75 percent to N10.17 trillion as against N9.10 trillion in 2017.
Mr. Onyema who addressed the capital market community on Monday during the NSE’s 2018 market recap and 2019 outlook for the equities market, specifically said capital raising was dominated by the Federal Government, which was responsible for 79.30 percent bond issuances during the period.
He said in the 2018 period under review capital raising by corporates declined by 39.09 percent with a total of N31.47 billion raised in 2018.
“The NSE’s EFF market witnessed reduced activity on the back of reduced risk appetite in the equities market, even as the best performing ETF was the Stanbic Pension ETF as it returned 16.37 percent, indicative of the effect of the recently implemented multi-fund structure for the pension fund Administrators.
Meanwhile, following recent moves by some listed companies to exit the Nigerian Stock Exchange (NSE), the exchange said they will be engaging companies that want to delist from the market.
Onyema who was answering questions from market operator and financial journalist explained that at the council level, they are taking it serious and would engage any company that wants to delist. While pointing out that companies delist due to different reasons, ranging from restructuring, merger among others.
On 2018 market performance he pointed out that “while new company listings remained low during the year, equity turnover remained relatively stable, marginally declining by 5.45 percent to N1.20 trillion. We also witnessed a 50.53 percent increase in foreign outflows from a total of N402.26 billion to N605.54 billion in 2018”.
According to him, this trend highlights attenuated foreign participation due to a shift to higher yielding assets with lower risks in developed countries, coupled with the impending political risks in the coming Nigerian elections.
He noted that foreign portfolio investment outpaced domestic participation by 1.74 per cent in 2018 , accounting for approximately 50.53 percent of total transactions while the domestic transactions investment constituted 49.13 percent.
Furthermore, he stated that the market witnessed 50.53 percent increase in foreign outflow from 402.26 billion in 2017 to 605.54 billion in 2018.
This, according to him was attributable to foreign participation due to a shift in higher yielding assets with lower risks in the developed countries during the period, coupled with the impending political risk in the forthcoming election in Nigeria.
For 2019 outlook, he said the swift approval and implementation of the 2019 budget may have a positive impact on companies’ earnings as well as consumer spending. “Therefore we anticipate a return of listings during the year with an uptick in market activity during the second half of 2019”. Stressing that they will continue the execution of 2018 strategy.
“Domestically, we believe market sentiments in the first half of the year will be driven by uncertainty in oil prices as well as the 2019 elections. Accordingly, we anticipate volatility in equities market in first half of 2019.
“We believe that swift approval and implementation of the 2019 budget may have a positive impact on companies’ earnings as well as consumer spending. Therefore, we anticipate a return of listings during the year with uptick in market activity during the second half of 2018.
On measures to ensure that more companies approach the market for listing, he said the exchange is currently engaging the government to enforce the listing of already privatized companies that fail to list over the years.
“We try to ensure that people live up to contract they sign in privatisation process, we also find innovative solutions to carter for their financial needs, we also look for more opportunities that would facilitate their listings.”
Aside from these measures, Onyema said the exchange is also engaging with the issuing houses and brokers as intermediaries that would work closely with the firms, package them and bring them to the exchange for listing.