Nigeria bourse chief ties H2 market uptick to swift passage of 2019 budget

The head of the Nigerian bourse have said that the market could be set for an uptick in the second half but he said such a positive outlook is tied to a swift approval and implementation of the 2019 budget.

The budget was presented by the president, Muhammadu Buhari in November to the National Assembly, which is yet to start any deliberation on the document.

Oscar Onyema, the chief executive officer of the Nigerian Stock Exchange (NSE) said an uptick in market activities will have a positive impact on companies’ earnings as well as consumer spending.

Onyema was briefing the stock broking community, analysts, media and other stakeholders, on the performance of the market in the preceding year and giving prognosis for the market for the New Year 2019 at the stock exchange house.

He however said market volatility will prevail in the first half  of the year amidst election jitters and unstable oil prices.

  “The market sentiments in the first half of the year will be driven by uncertainty in oil prices as well as the 2019 general elections. We anticipate volatility in equities markets first half of 2019, with enhanced stability post-elections,” the NSE boss said.

Reviewing the performance of the market in 2018, Onyema noted that NSE equity market started the year on a high, with the All Share Index (ASI) reaching a ten-year peak of 45,092.83 in January.

“This was largely driven by the positive performance of the ASI in 2017 which emerged the best in Africa. As we approached the second quarter, political risks, oil price volatility and rising global yields resulted in bearish sentiments that saw the ASI and equity market capitalization fall by 17.81% and 13.87% to close at 31,430.50 and N11.73trillion respectively,” he said.

Onyema further pointed out that  listing activity remained relatively low in 2018 with one listing and four delistings, as equity turnover remained relatively stable, marginally declining by 5.45 percent to N1.20 trillion.

Proactive steps are however been undertaken by the local bourse to strengthen listings in 2019, the NSE boss revealed.

“To enhance our listing prospects, we have strengthened our government engagement efforts on privatization and listing of state owned enterprises, and we expect to take advantage of opportunities within this space during the year.

“We also intend to maintain our collaborative efforts with public and private sector stakeholders to advocate for market friendly policies, and cater to infrastructure financing needs as well as other capital requirements necessary for sustainable economic growth. The Exchange intends to work with the private sector as well, to catalyse the listing of more companies,” he said.

In his review of the 2018 performance, Onyema noted that turnover velocity inched up 0.91 percentage points to 10.25 percent, and likewise, the size of volumes traded in the period increased by 0.96 percent to 101.43billion with the financial services sector being responsible for the highest traded volume and value.

Foreign portfolio investments were also seen to have outpaced domestic participation by 1.73 percent in 2018, accounting for 50.87 percent of total transactions, while domestic transactions accounted for 49.13 percent. Within Domestic institutional order flow was 56 percent while retail order flow was 44 percent,” Onyema revealed in his presentation.

Other market activity details revealed by the NSE boss was an 11.75 percent increase in fixed income market capitalization to N10.17tn from N9.10tn in 2017, with capital raising being dominated by the Federal Government who borrowed N1.16tn in a bid to finance fiscal and infrastructure deficits.

He said State Governments raised N125.59bn in new debt capital, while corporate raised a total of N31.47bn.

The market also witnessed the listing of a N100bn FGN Ijarah Sukuk designed to finance critical road infrastructure across the country.

With regards to NSE derivatives initiative, Onyema said that “our technology infrastructure has been enhanced to support the trading launch. The rulebook has been created and is currently going through the approval process alongside on- boarding of dealing members.”