click to edit master title style - nigerian stock exchange chartered... · 8.10.2013 · q1 2013...

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Presented by

Oscar N. Onyema CEO

for

STANDARD CHARTERED BANK’S CAPITAL MARKET FORUM Lagos, Nigeria

October 8, 2013

GIANT STRIDES: Journey to $1 Trillion Market Capitalization

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2

Agenda

1

• Nigerian Capital Market Milestones 2

• African Opportunity: Nigeria

3 • Nigerian Capital Market Performance

4 • Capital Market Ecosystem

5

• Capital Market Growth Risks 6

• Targeting $1TRN, NSE Key Initiatives

7 • Conclusion

The Nigerian Stock Exchange 08-Oct-2013


08-Oct-2013 The Nigerian Stock Exchange 3

The African Opportunity: Nigeria’s Profile

Total GDP: USD243.98 billion (2012)

Real GDP Growth (%): 6.18% (Q2 ‘13)

Inflation (%): 8.2% (Aug ‘13)

External Reserves: US$45.7 billion (26 Sep ‘13)

External Debt: US$6.920 billion (Jun ‘13)

Total Population: 174.5bn (Jul ‘13 est.)

Main stock markets: NSE (Sep ‘13)

– N17.72tr (US$114.16bn) Total market cap

– N11.66tr (US$75.08bn) Equities market cap

Resources:

– Oil & Gas (2nd largest oil reserves in Africa; 10th largest in the world)

– Mining: coal, minerals, precious metals

– Commodities: agriculture, timber, rubber

Industries:

– Leather, textiles, cement, fertilizer

Best Performing Sectors: (Q2 ‘13)

– Agriculture (40.1% of GDP)

– Wholesale & Retail Trade (17.3%)

– Crude, Petroleum & Natural Gas (12.9%)

– Telecommunications (8.4%)

– Others (6.7%)

IVORY

COAST

Kenya

ETHIOPIA

ERITREA

SUDAN

EGYPT

NIGER

MAURITANIA

MALI

NIGERIA SOMALIA

NAMIBIA

LIBYA

CHAD

SOUTH AFRICA

TANZANIA

DEM REP

CONGO

Angola

ALGERIA

MOZAMBIQUE

BOTSWANA

ZAMBIA

GABON

CENTRAL AFRICAN

REPUBLIC

TUNISIA

MOROCCO

UGANDA

SWAZILAND

LESOTHO

MALAWI

RWANDA

BURUNDI

TOGO

BENIN

Ghana

LIBERIA

SIERRA LEONE

GUINEA

BURKINA FASO GAMBIA

CAMEROON

SÃO TOME & PRINCIPE

ZIMBABWE

REPUBLIC OF

CONGO

EQUATORIAL GUINEA

WESTERN

SAHARA

DJIBOUTI

SENEGAL

GUINEA-BISSAU

COMOROS

CAPE VERDE

MAURITIUS

MADAGASCAR


1961 Trading began with 19 listed securities - 3 equities, 6 Gov’t bonds and 10 corporate bonds

Milestones in the Nigerian Capital Market

• Since its inception, the NSE has assisted corporations with raising capital through the issuance of equity and fixed-income products

• The NSE has provided a platform for the FGN, individual States and Local Governments, and other government entities to raise funds for various types of projects through the issuance of debt

• The NSE is positioning to become “the Gateway to African Markets”

• To achieve this, the Exchange has embarked upon a transformation program to compete effectively in the global marketplace, while meeting the changing needs of our clients, and facilitating the mid- to long-term financing needs of the nation

1960 The Nigerian Stock Exchange (NSE) was founded as the Lagos Stock Exchange

1970s The Lagos Stock Exchange becomes the NSE and several branches (with trading floors) are opened across Nigeria

1980s Focus on increasing corporate governance in the market, on the back of international exposure via Reuters

1990s The IPF is operational; policy is enacted to encourage foreign participation; and the Exchange automates trading

2000s Modernization, strong GDP growth, an influx of local/ foreign participation ignite the market; weak regulatory practices rupture the market

The Nigerian Stock Exchange 4 08-Oct-2013


The Nigerian Stock Exchange 5

An Attractive Investment Destination

3rd Largest Exchange in Africa by Market Cap*

Approx. 5 million investors:* Local YTD – 49.1% of market activity Foreign YTD – 50.9% of market activity Avg. daily value traded YTD (N4.42b, $28.49m)

Avg. daily volume traded YTD (450.50m)

234 Active dealing member firms 48 Dealing members/Issuing houses 20 Ordinary members/Issuing houses

Equities and products:† Total Market Capitalization (N17.72t, $114.16b) 196 listed equities (N11.66t, $75.08b) and 189 operating companies; 57 bonds (N5.98t, $9.07b) 1 ETF (N311.40m, $2.01m)

Founded in 1960

14 electronic trading floors around Nigeria

•Data/figures as at the end of Aug 2013 † Figures as at September 30, 2013

The Nigerian Stock Exchange…

08-Oct-2013

Click to edit Master title style | ASI Index Value

Value Traded (N) Turnover Velocity (Annualized) – Equities (%)

Market Capitalization (N)


9.5

15.42

5.57

0

4

8

12

16

20

Q1 2013 Q2 2013 Q3 2013Monthly total value traded (turnover) divided by Month-end equities market capitalization) x 12 – expressed as a percentage (WFE)

16.41 17.44 17.72

0

5

10

15

20

Q1 2013 Q2 2013 Q3 2013

33,536.25

36,164.31 36,585.08

31,000

32,000

33,000

34,000

35,000

36,000

37,000

Q1 2013 Q2 2013 Q3 2013

255,034

336,653

196,832

0

100,000

200,000

300,000

400,000

Q1 2013 Q2 2012 Q3 2012

Mill

ion

s NSE Baseline Market Statistics (YTD)


56.72%

28.80%

22.61%

13.78% 12.63% 10.54%

12.71%

5.39%

0.84%

-2.21% -6.06% -8.18%

-13.06%

-19.66% -22.14%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

GhanaComp.

Nigeria ASI Nairobi SE DJIA S&P 500 SEMDEX NASDAQComposite

FTSE 100 FTSE/JSE FTSE AIM MASI Hang Seng WIG 20 EGX 100 IBovespa

Global Exchange Metrics – Indices

Strong Global Performance (H1 ’13)

7

• H1 ‘13 performance shows the DJIA performing at 13.78% reflecting the impact of the US’s QE stimulus

• Although QE is driving performance of US capital markets, the Nigerian market is being driven more and more by local investors as stated previously

• As QE is phased out, global investors may seek to cover positions in their respective local markets which may impact Nigeria in terms of foreign investors looking to sell down

• Performance in the Euro zone as reflected in the FTSE AIM is still sluggish as a result of the lingering debt crisis

• Globally, Nigeria remains one of the most attractive markets



The Nigerian Stock Exchange 8

Nigerian Capital Market Ecosystem – Key Players

NSE (SRO) Only operating exchange for

listing companies

SEC (Apex Regulator) Maintains primary oversight of

the capital market

Investors/Participants Originate orders

Registrars Maintain registers of company

shareholders

Broker-Dealers Bring issuers to the market;

execute buy/sell orders

Custodians Maintain assets on behalf of

investors

Trustees Maintain assets on behalf of

investors

CSCS Sole provider of clearing and

settlement services

08-Oct-2013

Others Issuing houses, OTC platforms,

fund managers etc.

Click to edit Master title style | The Nigerian Capital Market Today

• Exchange-driven reforms have strengthened the market, e.g., regulatory oversight is stronger, the market is more efficient, and investors can count on a higher level of protection

• The Exchange is focused on establishing

technology competitiveness, and is advocating policy changes necessary to enable the Nigerian capital market absorb the forces of change

• The Exchange is facilitating the creation of ‘African Business Champions’ of tomorrow


2010s Reforms take hold in the Nigerian capital market: growth-enabling market structure; stronger regulatory environment; targeted business development efforts; 21st century technologies; first-rate investor protection programs; market development and improved operational efficiency

$1 Trillion Market Cap


08-Oct-2013 The Nigerian Stock Exchange 10

NSE Key Initiatives

Term

2011 2012 2013 – 2014

NSE

Key

Init

iati

ves

Wit

hin

NSE

Co

ntr

ol

- Market Segmentation - Company Share Buy-Back - Introduction of ETFs - Investor Clinics - New Web Site - Revised Listing Rules - Market Making (approved) - Securities Lending (approved) - Short Selling (approved)

- Enhancement of Regulatory Programs - Financial Literacy Program - IFRS Compliance - Market Data Services - Advocacy On-going - Develop Product Liquidity and Depth - Attract and Retain More Listings

- ASeM Re-Launch - X-Issuer Portal - CSR Program - Delivery of X-Gen On-going - Product Innovation (e.g. ETFs, NDRs) - Coop with Other Exchanges & Global

Orgs - Policy Advocacy - Demutualization - Derivatives Feasibility Study - Transaction Cost Analysis - Enhanced Rulebook - Whistle Blowing Program - Market Optimization - Operation of Investor Protection Fund - Automation of Transaction Lifecycle

Ou

tsid

e N

SE

Co

ntr

ol

- AMCON Debt Resolution - Advocacy

- Review PFA Investment Guidelines - Tax Breaks on Transaction Fees - Exit Strategy for Privatized Entities - Broker Margin Debt Resolution - Broker Access to Funding

- Policy on Large Cap Firms - Access to SWF Funds - Reduce Focus on Dividends - Capacity of Local Institutional Investors

(on-going)


• Clear delineation and segregation of responsibilities between capital market operators

• Robust regulation and risk based supervision

• Greater enforcement of laws, rules and policies

• Cultivation of strong and extensive network of domestic talent

• Greater array of products and services

• Good corporate governance

• Quality new listings

• Imbalance between supply and demand, and oversubscription of quality listed companies

• Inadequate talent pool in the region to support rapid growth

• Effective information dissemination

• Sufficient legal due process and protection

• Sufficient due diligence by market players

• Relatively few listed companies when compared to regions like China and India

• Low liquidity

• Government policy

11

Capital Market Growth Risks

Risks Risk Mitigation Measures



12

Conclusion

• The Exchange will continue work to:

– innovate on technology and product development

– achieve efficiency and liquidity

– advocate growth enabling policy positions

– restore investor confidence, as we improve our regulatory soundness

– adapt to meet the shifting needs of its clients

– achieve competitiveness as a focal point of its agenda

– achieve its goal of transforming the Nigerian capital market

• We are on course to delivering service excellence, and positioning ourselves as the undisputed “gateway to African markets”.


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Thank You

Stock Exchange House

2 - 4 Customs Street

P.O. Box 2457, Marina

Lagos Island, Lagos, Nigeria

[email protected]

THANK YOU

Questions & Answers

click to edit master title style - nigerian stock exchange chartered... · 8.10.2013 · q1 2013...

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