The Nigerian Exchange (NGX) Limited says it will focus more on attracting listings, enhancing liquidity through marginal lending and developing new products on digital assets in 2023.
This is as NGX revealed that the total turnover of trades in 2022 improved by 27 per cent from N916 billion in 2021 to N116 trillion while adding that out of the N330 trillion moved within the country as regards retail trading in 2021, only N1 trillion has been made by the capital market.
NGX Chief Executive Officer, Temi Popoola, disclosed this during the NGX 2022 market recap and 2023 outlook which held via Zoom on Wednesday. Stating the reasons for the exchange’s positive performance in 2022, Popoola said that attractive dividend yields of some stocks, recovering corporate earnings, repatriation trades, improved sentiments among domestic retail investors and the inability of T-bills and other fixed income instruments to provide positive return ensued that market gained almost a 20 per cent return.
He also revealed that BUA Foods, Geregu were among the top 20 most traded stocks and accounted for 6.14 per cent and 1.45 per cent of the turnover recorded in 2022 while adding that the decent growth in the market’s turnover was due to the increased participation from domestic investors.
“This shows that the local market has depth and can put capital to work amid the outflows. Fixed income market saw a slight uptick in turnover to N3.89 billion in 2022 from N3.53 billion recorded in 2021, representing a 10.2 per cent y/y increase”, he said.
Listing the core initiatives of the exchange for the year, Popoola said the NGX will be looking to position itself as a platform for support for the administration and added that it is open to work with the government and other stakeholders to solve some of the nation’s key challenges.
He said, “We are faced with liquidity, revenue, sources of capital from assets that are stale or meant to be monetized and at the heart of what we will be looking to do is use listings as a vehicle for meeting strategic aspirations of the new governments. The new listings that we have had in the last 18 months have been responsible for 15 per cent of the trading in 2022 and how do we get more listings to the exchange? We will continue to do our bid to address this and we will be doing that through advocacy, creating the right environment. We will drive technology companies to the exchange following technology board listing rule approval, enhance liquidity through margin lending and investors’ education (We are working with the CIS, ASHON to drive this initiative to get more retail investors), forge strategic partnerships with DFIs and banks, create sustainability products like carbon +, develop new products like non-depository receipts, digital assets among others.
We will work with the SEC and other agencies to see how we can drive listings in the technology board. Very soon, you will hear announcements from us in that regard as we are looking to attract the think-tanks within the technology ecosystem to make a push in the capital market”
According to him, “A lot of companies are in the pipeline to list this year but we cannot disclose for now but we hope we can bring 2 or 3 big ticket listings to the exchange. How do we get the retail investors? In 2021, the amount of money/velocity between people moving money among themselves was N330 trillion in Nigeria but the capital market was only able to attract N1 trillion of that on the equity side and so there has got to be some changes. One of the things we are excited about is what we are doing with one or two telcos that can help us improve our data dissemination to retail investors. We are also looking at how we can position the exchange as a place to hedge currency exposure and several markets across the world have mechanisms for this and we are looking at getting that done on our side”.
The NGX CEO thereafter said that as the nation evolves, the exchange is quite excited and open to the opportunities available to the capital market this year and added that it will embark on various strategies to bring back foreign investors into the market.
“The key driver was the macroeconomic picture which drove foreign capital away from Nigeria. One of this is because the foreign market coverage reduced significantly and a big part of resolving this is beyond the exchange but one of the things within the control of the exchange is that we have to take a strong lead in marketing our products and also if the macro picture changes, foreign capital may not necessarily flow through and so there is need to sell the story of the NGX to these investors and this is the big part of what we will do this year”, Popoola said.
