The Series 1 offer for sale of 575 million shares held by the MTN Group to Nigerian investors, which held last December, has been successfully completed and was oversubscribed by 139.47 per cent. This was an additional 82.25 million MTN Nigeria shares.
A statement from the telecommunication company explained that the oversubscription raised the initial number of shares sold from 575 million to a total of 661.25 million shares.
The offer was implemented by way of a book-build to qualified institutional investors and a fixed price offer of N169.00 per share to retail investors.
According to the statement, the breakdown of the sale showed that approximately 76 per cent of successful applicants via digital platform were women, while 85 per cent of the sale was from persons under 40 years of age.
Following the successful completion of the offer, “MTN Group’s shareholding in MTN Nigeria reduced by 3.25 percentage points, from 78.83 per cent to 75.58 per cent.”
According to the statement by MTN Nigeria, signed by the Company Secretary, Uto Ukpanah, the offer was oversubscribed with valid applications for a total of 801.97 million units, leading to the activation of the approved 15 per cent over-subscription clause of an additional 86.25 million MTN Nigeria shares.
It said, “In all, 661.25 million MTN Nigeria shares were allotted. A total of 126,720 retail investors submitted valid applications and received full allotment.
“Institutional investors, including pension funds, insurance companies, asset managers, corporates, and foreign portfolio investors that participated in the book-build were allotted 72.09 per cent of their applications. This includes Nigerian pension funds representing approximately 6.5 million Nigerian contributors.
“In line with the innovative incentive structure of 1 free share for every 20 purchased, subject to a maximum of 250 free shares per investor, an additional 4.28 million MTN Nigeria shares will be allotted to qualifying investors who hold the shares allotted to them for 12 months till 31 January 2023.”
The statement also said MTN Group adopted a unique structure in the offering by determining a fixed price of N169 per share for the retail offer through a book-build to qualified investors that was completed on November 26, 2021. The fixed price offer to retail investors was at a discount of 11 per cent to the closing price of MTN Nigeria stock on the day the book-build was completed.
The offer commenced on December 1, 2021, and was completed on December 14, 2021.
Nigerian investors across the country supported the Offer through multiple channels – Receiving Agents, Issuing Houses and Primary Offer (a digital application platform).
MTN said, “The offer is a landmark transaction and a true reflection of Nigerian investor confidence in MTN Nigeria. It marks the first time a digital application platform was used to democratise investing in a public offer and maximise investor participation across the country.
“More than 89 per cent of retail offer subscribers applied through the Primary Offer platform (mobile and web), and 114,938 new Central Securities Clearing System (CSCS) accounts were opened by first-time investors.”
CEO of MTN Group, Ralph Mupita, said, “We are pleased that this offer has given so many Nigerians the opportunity to become owners of MTN Nigeria.
“With over 6.6 million Nigerians directly or indirectly becoming shareholders in MTN Nigeria, the objective of broadening the shareholder base, and creating shared value has been achieved. We are proud that our offer was the first Nigerian public offer to use the digital application platform, primary offer, which enabled wider investor participation across Nigeria. We thank the Nigerian authorities for their support of this offer. We remain committed to playing our humble role in driving digital and financial inclusion in Nigeria over the medium.”
Commenting on the offer, the CEO of MTN Nigeria, Karl Toriola, said, “We are delighted to welcome so many new shareholders to the MTN family, up 11.6 times from the number before the offer.
“It has been inspiring to see so many Nigerians, many of whom are young, acquire shares for the first time, and use a digital platform to do so. This is the beginning of a journey to broaden our shareholding and there will be more opportunities to participate.
“We are pleased with the level of digital innovation we championed with this offer with the active collaboration of our lead issuing house and the various regulatory bodies. Deepening retail participation in Nigeria’s capital markets is a process, and we are off to a great start, demonstrating the role digital platforms can play in expanding access.
“I am particularly pleased that we completed this transaction in an accelerated time frame ensuring new shareholders can realise value almost immediately through participation in our 2021 full-year dividend.
“I would specifically like to thank the Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, the Nigerian Communications Commission and the wider federal government for the opportunity to execute this Offer.
“I thank the Securities and Exchange Commission, the Nigerian Exchange Limited, the CSCS, and all the parties involved for their support in delivering this ambitious Offer structure.
“I also appreciate our staff who worked tirelessly with our advisers on this project. Most of all I would like to thank our new shareholders for having confidence in us and in our future. We are delighted to have you on board for this journey to building a digital future together.”
The CEO of Chapel Hill Denham, the Lead Issuing House, Bolaji Balogun, said, “Chapel Hill Denham is honoured to have worked with MTN to complete Nigeria’s first digital and predominantly green offering. I wish to thank the SEC, the NGX, the CSCS, all the professional firms and other stakeholders, for delivering a big win for Nigeria’s capital markets in enabling the adoption of primary offer and this transaction marks a new and exciting future.
“Over 90 per cent of subscribers to the offer were first time participants in the capital markets and MTN Nigeria’s strong investment case made this possible.”
Chief Executive Officer, Nigerian Exchange Limited (NGX), Temi Popoola, said, “The NGX is proud to have worked with MTN Nigeria, Chapel Hill Denham and other parties to the transaction in advancing Nigeria’s capital market through the adoption of forward-looking technology.
“In the NGX era, we are resolute in our commitment to democratise finance in Nigeria in order to ensure every type of investor has access to public markets where they can invest in companies they believe in and reap value.
“With the digitised MTN Nigeria offering, we have made a tremendous stride in our plans for a full digital transformation of the Nigerian capital markets and we look forward to building on this.”
Similarly, CEO of Central Securities Clearing System Plc, Haruna Jalo-Waziri, said, “We are excited to be part of the innovation brought by the offer, which afforded the successful launch of primary offer digital application platform.
“This further buttresses the necessity for digital transformation, allowing market access for all categories of investors, including institutional and retail investors within and outside of the country.
“At CSCS, digital transformation has been the core of our strategic direction. We will continue to collaborate with our participants, issuers and other stakeholders to efficiently and effectively ease market access with innovative solutions through the investment cycle.”
The stock market of the Nigerian Exchange Limited (NGX) yesterday extended its positive outing into February with a gain of N263 billion.
The market was lifted by gains recorded by Seplat Energy Plc, Presco Plc, MTN Nigeria Communications (MTNN) Plc, Conoil Plc and 34 other stocks on the bourse.
The NGX All-Share Index (ASI) increased by 486.54 basis points or 1.04 per cent to close at 47,111.21 basis points, while the overall market capitalisation size gained N263 billion to close at N25.387 trillion.
Sector performances were broadly positive yesterday with the Oil and Gas gaining 5.43 per cent, Banking index added 2.15 per cent, Industrial index rose by 0.38 per cent and Consumer Goods index inched up by 0.19 per cent.
As measured by market breadth, market sentiment was positive as 36 stocks gained relative to 21 losers. SEPLAT Energy recorded the highest price gain of 10 per cent to close at N869.00, per share. Conoil followed with a gain 9.79 per cent to close at N24.10, while Academy Press rose by 9.57 per cent to close at N1.03, per share.
R. T. Briscoe went up by 9.09 per cent to close at 24 kobo, while Presco appreciated by 8.75 per cent to close at N105.00, per share. On the other hand, Caverton Offshore Support Group led the losers’ chart by 9.50 per cent to close at N1.62, per share. Eterna followed with a decline of 9.17 per cent to close at N5.45, while NCR shed 9.09 per cent to close at N3.00, per share.
Japaul Gold and Ventures lost 7.50 per cent to close at 37 kobo, while Ecobank Transnational Incorporated (ETI) shed 7.20 per cent to close at N11.60, per share.
However, the total volume traded decreased by 21.63 per cent to 341.516 million units, valued at N3.692 billion, and exchanged in 6,417 deals.
Transactions in the shares of Transnational Corporation of Nigeria (Transcorp) topped the activity chart with 32.110 million shares valued at N37.462 million. Fidelity Bank followed with 25.155 million shares worth N71.503 million, while Access Bank traded 23.463 million shares valued at N238.277 million.
Guaranty Trust Holding Company (GTCO) traded 21.119 million shares valued at N587.324 million, while Nigerian Exchange Group (NGXGroup) transacted 20.512 million shares worth N502.540 million.
Analysts at InvestmentOne Research said: “The equities market closed northwards due to the gains printed across major sectors. Going forward, we expect investor’s sentiments to be swayed by the search for real positive returns and developments in the interest rate space.
“We reiterate that this may be a great period to pick up some quality names with a medium to long-term investment horizon.”
The stock market of the Nigerian Exchange Limited (NGX) yesterday resumed trading for 2022 on a positive note as it gained N887 billion in market capitalisation. .
The All Share Index (ASI) rose by 309.79 points, representing an increase of 0.72 per cent to close at 43,026.23 basis points, while the overall market capitalisation value gained N887 billion, representing a growth of 3.98 per cent to close at N23.184 trillion.
Analysis of market numbers showed that the Consumer Goods dropped by 0.9per cent, Oil & Gas index also dropped 0.5per cent and Insurance was down by 0.4 per cent while the Industrial Goods appreciated by three per cent and Banking index gained 0.4 per cent.
The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; BUA Cement, Stanbic IBTC Holdings, Flour Mills of Nigeria, Zenith Bank and Neimeth International Pharmaceuticals.
Market sentiment, as measured by market breadth, was negative as 27 stocks declined, relative to 18 gainers. Academy Press recorded the highest price gain of 10 per cent to close at 55 kobo, per share.
Wema Bank followed with a gain 9.72 per cent to close at 79 kobo, while Cornerstone Insurance up by 8.70 per cent to close at 50 kobo, per share.
Neimeth International Pharmaceuticals rose by eight per cent to close at N1.89, while BUA Cement appreciated by 7.31 per cent to close at N71.95, per share.
On the other hand, Ardova, Northern Nigeria Flour Mills and Vitafoam Nigeria led the losers’ chart by 10 per cent each, to close at N11.70, N7.20 and N20.25, respectively, per share.
Chams followed with a decline of 9.09 per cent, to close at 20 kobo, while SUNU Assurances depreciated by 8.89 per cent to close at 41 kobo, per share.
The total volume of trades decreased by 52.4 per cent to 216.651 million units, valued at N1.516 billion, and exchanged in 4,080 deals. Transactions in the shares of Chams topped the activity chart with 29.865 million shares valued at N6.080 million. Wema Bank followed with 17.111 million shares worth N13.309 million, while Zenith Bank traded 11.035 million shares valued at N278.219 million.
Transnational Corporation of Nigeria (Transcorp) traded 10.755 million shares valued at N10.496 million, while Sovereign Trust Insurance transacted 10.476 million shares worth N2.862 million.
This week, United Capital expected the January buying interest to resume in no distant time as investors begin to position for full year, 2021 dividend announcements.
Despite the Nigerian Exchange Limited (NGX) All-Share Index or ASI closing positive, two sectors, the Alternative Securities Market (ASeM) and Industrial Goods indices have emerged as worst performing on the bourse in 2021.
Analysis of market performance for 2021 revealed that while the NGX ASI closed 2021 with a gain of 6.07 per cent to 42,716.44 basis points, the ASeM and Industrial goods indices depreciated by 8.11per cent and 2.15per cent respectively.
THISDAY checks revealed that investors’ profit-taking in the two indices heavy-weight affected overall performances in the year under review.
Specifically, investors’ profit-taking in Juli Plc weakened the ASeM index, while downward in stock price of BUA Cement Plc depreciated the industrial good index in 2021.
The stock price of BUA cement dropped by 13.32 per cent to N67.05 in 2021 from N77.35 it opened for trading.
BUA cement’s 13.3 per cent decline in stock price was related to its Basic Earnings Per Share.
The company closed nine months ended September 30, 2021 with N0.66 Basic Earnings Per Share as against N0.55 recorded in prior nine months of 2020.
“For BUA cement, the stock price in 2021 was not commensurate with the company’s Basic Earnings Per Share and investors decided to selloff, ””said Capital market analyst, Mr. Rotimi Fakeyejo.
Other stocks in the industrial goods recorded decline in the year on the heels of poor corporate earnings.
For einstance, stock price of CAP Plc dropped by 2.75 per cent to close at N19.45 from N20.00 it opened in 2021, while Beta Glass Plc. Dropped by 4.4 per cent to N52.95 from N55.40.
Four companies are listed on the AseM board of the Exchange such as; Smart Products Nigeria Plc, Capital Oil Plc and Rak Unity Pet. Company Plc that closed flat last year.
The stock price of Juli dropped by nearly 40 per cent to N0.91 in 2021 from N1.51, while Smart Products Nigeria traded flat at N0.20 for the second consecutive year.
Both Capital Oil and Rak Unity Pet. Company also traded flat N0.2 and N0.30 in 2021 respectively.
Reacting on the AseM index poor performance, analyst at PAC Holdings, Mr. Wole Adeyeye attributed the decline to investors profit-taking in Juli.
According to him: “The share price of Juli declined by 39.74 per cent to N0.91 kobo in 2021. The prices of other stocks under ASeM Index (such as Smart Products Nigeria Plc, Capital Oil Plc, Rak Unity Pet. Comp. Plc) remained flat in 2021.
“Of course, investors are expected to react over the company’s poor corporate earnings due to economy challenges. Juli in 2020 financial year reported N56.5million loss as against N1.57million loss reported in 2019.”
The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said the manufacturing sector in Nigeria is too dependent on import, which is a major shortcoming of the Nigerian manufacturing sector.
According to him: “The sector accounts for about three per cent of foreign exchange earnings andover 30% of import bill. This demonstrates that the sector is not properly aligned with the vision of self-reliance being promoted by the current government.
“Local value addition is still very weak. The most sustainable segment of the manufacturing sector are the food & beverage industries, and the cement industries where the local content is well over 60%. This explains the competitive strength of the sector.”
The current challenges he highlighted are, “Weak infrastructural base – power, transportation, Apapatraffic issues, railway system, and the ports; High cost of fund, absence of long-term funds, challenges of access to credit by SMEs as well as other firms in the sector, because of perception of manufacturing is very risky in the economy. Except for intervention funds, especially from the Bank of Industry (BoI), the cost of fund in the Nigerian economy has been well over 20% for industrialists. It is difficult to achieve a competitive manufacturing investment with this kind of fund.”
He added that the sector also suffer from the challenges of weak institutions. This makes regulation ineffective – faking and counterfeiting, smuggling, under invoicing , among others.
Meanwhile, the Oil & gas index on the NGX emerged as the best performing index on the NGX amid impressive profit and revenue driven by hike in prices of Premium Motor Spirits (PMS), among others.
The index gained 52.52 per cent to close 2021 at 345.01 basis points from 226.20basis points it closed in 2020.
The three drivers in the index, Totalenergies Marketing Nigeria, Oando Plc, and Conoil Plc appreciated in prices.
The stock price of Totalenergies Marketing Nigeria gained 71 per cent to close 2021 at N221.9 from N130.00, while Oando gained 19.5 per cent from N3.70 it closed in 2020 to N4.42.
In addition, Conoil gained 5.52 per cent in stock price to close at N22 from N20.85 it opened for trading.
The federal government this year tends to suspend subsidy payment on crude importation and the global oil price gained significantly over Crude oil production cut by the Organization of the Petroleum Exporting Countries (OPEC).
A report by National Bureau of Statistic (NBS) revealed that average retail of premium Motor Spirit (petrol) paid by consumers increased by 0.19 per cent on a year-on-year basis from a lower cost of N167.27 per litre recorded in corresponding month of last year to a higher cost of N167.60 per litre in November 2021.
However, the fact that the price of the commodity is still been sold at an average of N162/N163 per litre stations across the country, meant that the Federal Government, through the Nigerian National Petroleum Corporation (NNPC) is still subsiding a litre of the commodity for Nigerians.
Capital market analysts have urged investors to invest in listed Oil and gas stocks with strong fundamentals rather than patronizing banking stocks as most are struggling to survive numerous policies of the regulating bodies.
TotalEnergies Marketing Nigeria in its third quarter 2021 unaudited results for the period ended September 30, 2021 reported 881 per cent increase in profit before tax to N19.7billion, driven by 50 per cent growth in revenue that moved from N152billion in Q3 2020 to N242billion in Q3 2021.
In the period, multinational petroleum marketing company declared interim dividend of N4.00.
Conoil also grew profit before tax by 44 per cent to N2.36billion in Q3 2021 as revenue gained 15 per cent from N88billion in Q3 2020 to N101billion in Q3 2021.
The growth in profit drive the company’s Earning Per Share to N2.30 in Q3 2021, about 43.8 per cent increase over N1.60 reported in Q3 2020.
Speaking further, Fakayejo attributed the Oil & Gas performance to higher margin in crude oil products, stressing that the ease of movement also contributed to revenue and profit.
According to him, “These companies reported increase in revenue due to higher margin in products the sale this year. The restriction of movement eroded their revenue last year but with the ease on COVID-19 lockdown, they were able to grow revenue that translates into profit.”
He maintained that investors can always consider buying Total Nigeria shares over its intrinsic fundamentals on the NGX.
In his words, “Total Nigeria is one of the most reliable Oil & gas stock on NGX and the company by year end is going to have EPS of N35.00. The company’s payout is always 70 to 80 per cent every year and they may still pay dividend of N20.00 at the end of 2021 financial year. It makes a lot of sense for investors to buy Total Nigeria and Seplat Petroleum shares on NGX.”
The stock market of the Nigerian Exchange Limited (NGX) closed on a negative note yesterday on the back of profit-taking by investors.
In summary, the NGX All-Share Index (ASI) dropped by 22.89 basis points, representing a decrease of 0.05 per cent, to close at 43,248.05 points. Similarly, the overall market capitalisation declined by N12 billion to close at N22.567 trillion.
Sectoral performance on the Exchange was mixed as the Insurance (+1.6 per cent) and Banking (+0.3 per cent) indices gained while the Oil & Gas (-0.4 per cent) and Consumer Goods (-0.2 per cent) indices recorded declines. The Industrial Goods index closed flat.
As measured by market breadth, market sentiment remained negative, as 24 stocks lost relative to 12 gainers. AIICO Insurance recorded the highest price gain of 9.21 per cent, to close at 83 kobo, per share. Access Bank followed with a gain 4.40 per cent to close at N9.50, while Wapic Insurance appreciated by 4.17 per cent to close at 50 kobo, per share.
Ecobank Transnational Incorporated (ETI) went up by 3.73 per cent to close at N8.35, while FCMB Group appreciated by 3.33 per cent, to close at N3.10, per share. On the other hand, UPDC Real Estate Investment Trust led the losers’ chart by 9.89 per cent, to close at N4.10, per share. Ikeja Hotel followed with a decline of 9.63 per cent to close at N1.22, while UACN Property Development Company (UPDC) lost 9.32 per cent to close at N1.07, per share.
Chams shed 9.09 per cent to close at 20 kobo, while Union Bank of Nigeria (UBN) depreciated by 6.19 per cent to close at N4.55, per share.
The total volume of trades increased by 5.5 per cent to 224.910 million units, valued at N3.708 billion, and exchanged in 4,331 deals. Transactions in the shares of Access Bank topped the activity chart with 42.181 million shares valued at N389.703 million. Zenith Bank followed with 38.967 million shares worth N935.404 million, while FBN Holdings (FBNH) traded 16.894 million shares valued at N198.727 million.
GTCO traded 16.671 million shares valued at N413.979 million, while AIICO Insurance transacted 12,856 million shares worth N10.513 million.
Fidelity Bank has reported N6.6bn Q1 profit, and has reassured its stakeholders that it will continue to take measures to ensure the safety of customers, staff, and others during the COVID-19 pandemic.
This is just as The Economist has ranked Nigeria high on financial strength. Speaking at the bank’s 32nd Annual General Meeting (AGM) in Lagos on Thursday, Chairman, Board of Directors of Fidelity Bank, Mr. Ernest Ebi, said the bank “remains committed to building a sustainable business, even in the midst of the challenges associated with the COVID-19 pandemic.”
Ebi, who was a former Deputy Governor of the Central Bank of Nigeria (CBN), explained that the board, in line with its oversight responsibilities, had been meeting virtually, to strategise on new opportunity areas to cushion the impact of the pandemic and to sustain the growth trajectory of the bank.
These views were also affirmed by Fidelity Bank CEO, Mr. Nnamdi Okonkwo, who said the bank’s greatest strength was its ability to adapt to change.
According to him, the bank will explore new prospects that are opening up in the retail market, continue to focus on customer-centricity, innovation and digitalisation while keeping its eye on governance, risk and liquidity.
“We place a high premium on risk management and will continue to review our risk acceptance criteria in reaction to new market realities,” he added.
The meeting, which was held by proxy, in compliance with the Corporate Affairs Commission’s (CAC) issued guidelines on AGMs within the period, had in attendance very few shareholders, on account of social distancing and restriction of movement in Lagos as a result of COVID-19 preventive and precautionary measures. Others joined remotely via live streaming.
The shareholders, who spoke on the occasion, gave kudos to the board and management for 2019 performance, which saw the bank delivering double-digit growth across key performance indices.
Gross earnings grew by 14 per cent to N215.5 billion, driven by a 15.8 per cent growth in interest and similar income. The bank’s profit before tax (PBT) rose by 21 per cent from N25.1 billion in 2018 to N30.4 billion in 2019.
The shareholders unanimously endorsed the payment of a cash dividend of 20 kobo per share, which translated to N5.793 billion for the year ended December 31, 2019.
The National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, applauded the dividend growth from 11 kobo paid in 2018 to 20 kobo in 2019.
“From all the indices, this is a superlative performance. The achievement of over N30 billion in profits is indeed worthy of commendation,” Okezie stated.
Also, the President of the Nigerian Shareholders’ Solidarity Association, Chief Timothy Adesiyan, commended the improvement particularly in interest income, non-performing loans (NPLs), liquidity ratio, and profit after tax and gross earnings. While lauding the bank for its digitalisation programme, he expressed optimism that the bank would be positioned to take advantage of new and emergent opportunities based on its comprehensive upgrade of its technology architecture.
Meanwhile, Fidelity Bank has begun the 2020 financial year on a positive note with the announcement of its unaudited results for the three months ended March 31, 2020.
Gross earnings for the first quarter of the year grew by 5.7 per cent to N51.2 billion from N48.4 billion in the previous year, while profit before tax (PBT) stood at N6.6 billion, representing a marginal drop from the N6.7 billion recorded in the first quarter of 2019.
Shareholders’ funds also grew by 3.6 per cent from N234 billion in 2019, to N242 billion in the first quarter of 2020.
About N7tn of the N9.99tn pension fund assets has been invested in the Federal Government securities by Pension Fund Administrators.
Latest data from the National Pension Commission also showed that the PFAs raised their investment in infrastructure to N40.52bn as of November 30, 2019.
The N7tn invested in the Federal Government securities represents about 70.88 per cent of the total pension fund assets.
The figures are contained in a PenCom report obtained by our correspondents on Tuesday.
An analysis of the data showed that while the Federal Government’s securities took a huge chunk of the pension assets, state government bonds and corporate bonds took the balance of 29.12 per cent.
A breakdown of the figures showed that the highest amount of N4.86tn was invested in the Federal Government bonds alone.
This was followed by N2.1tn investment in Treasury Bills, while investment in Sukuk bond, agency bond and green bonds followed with N78.1bn, N10.82bn and N15.64bn respectively.
The N10.82bn agency bond, according to the commission, was invested in two government agencies, the Nigeria Mortgage Refinancing Company and the Federal Mortgage Bank of Nigeria.
The commission in the report stated that the sum of N117.79bn was invested by the PFAs in state governments’ securities.
This is about 1.18 per cent of the total pension fund assets of N9.99tn
For the private sector, an analysis of the report showed that the sum of N535.93bn, representing about 5.36 per cent of the fund, was invested in domestic ordinary shares, while foreign ordinary shares had a total investment of N62.6bn, amounting to 0.69 per cent.
The data also indicated that a total of N40.52bn was invested in infrastructure.
According to the commission, in May 2015, the operators invested N568m in infrastructure and increased this to N1.35bn in December 2015.
It added that the PFAs invested N2.06bn in infrastructure bond in December 2016. The investment rose to N6.86bn in December 2017.
The amount invested in infrastructure as of the end of September 2018 was put at N17.12bn.
Other security instruments where the pension fund was invested are the corporate bonds, N597.45bn, and the supra-national bonds, N4.1bn.
Similarly, the sum of N5.03bn was invested by the PFAs in foreign money market securities; N23.62bn in mutual funds; N224.63bn in real estate; N32.31bn in private equity fund; while cash and other asset investments had N45.14bn.
Given the 2020 plans and strategies unveiled by the Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema for 2020, the stock market has prospects to sustain the positive performance observed since the beginning of this year, writes Goddy Egene
Given the performance of the Nigerian stock market in 2018 and 2019, most investors who are risk averse may decide to wait for some time l before venturing into the market.
Any investor who adopts a wait and see strategy towards the equities market cannot be blamed because significant losses were incurred in last past two years. For instance, the market declined 17.8 per cent in 2018 and 14.6 per cent in 2019. Although, amid the uninspiring performance, some stocks appreciated and still fetched investors positive returns.
However, while some investors are still contemplating whether or not to invest in the stock market, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, has no doubt in his mind that 2020 will be a good year. Speaking in Lagos on Monday on the performance of the market in 2019 and out for 2020, Onyema expressed optimism that the market would record a positive performance this year.
He said the market has bright prospects, stressing that market sentiments may be buoyed by a steady and stable recovery in the domestic economy, alongside continued sustainability in monetary policy. “The signing into law of Nigeria’s Finance Bill 2019 and implementation of the 2020 budget may have a positive impact on companies’ earnings as well as consumer spending. Accordingly, the exchange will continue to advocate for business-friendly economic environment, working in conjunction with both the public and private sectors,” he said.
The NSE boss noted that in their aspiration to become a more agile and demutualised exchange, and pursuant to the Securities and Exchange Commission (SEC)’s ‘No Objection’, they will proceed to next steps which include seeking formal approval from their members on their demutualisation scheme.
“We are committed to continually provide clarity on the demutualisation process to our various stakeholders through regular engagements. While keeping an eye on the strategic intent of the exchange post demutualisation, we will continue to leverage our vast network of stakeholders, in addition to developing new strategic partnerships with the goal of delivering better products and services to our customers. As African Champions, we will maintain momentum in executing the NSE’s 2018 – 2021 Corporate Strategy in our efforts to elevate the prominence of Africa’s global financial markets,” he said. Speaking on some of factors that will drive investors’ sentiments in 2020, Onyema said a stable polity and business environment would be key to Nigeria’s success.
“Enhanced focus on infrastructure renaissance and promotion of laws that will support the business environment will be key to Nigeria’s success in 2020. Nigeria moved 15 places from 146th to 131st in the latest World Bank ease of doing business report as such the country has been tagged as one of the most improved economies in the world in terms of doing business reforms. These are positive indicators that will drive investors’ sentiment in 2020,” he said.
Looking Back Looking back at the market performance in 2019, Onyema, said the Nigerian stock market (which declined 14.6 per cent) mirrored the performance of the larger economy, which continued its moderate path of recovery, growing by 2.28 per cent. He added: “From an international investor’s perspective, the Nigerian bourse had to compete with developed and emerging capital markets which saw risk-based assets priced and valued more competitively.
“Capital conducive United States Fed policy enabled foreign investors to economically enhance leverage and seek investment opportunities in their home and adjacent countries, as Africa’s largest economy adjusted to new economic realities. “On the domestic front, investors contended with: the macroeconomic landscape; fiscal and monetary policy direction and a wait-and see attitude given trends in foreign portfolio investors(FPIs).”
Further reviewing the market performance in 2019, Onyema said although the Nigerian Stock Exchange(NSE)’s All Share Index (ASI) posted a negative return of 14.6 per cent to close the year at 26,842.07, the ASI reached a year high of 32,715.20 in February 2019.
“However, the equities market capitalisation increased by 10.55 per cent to N12.97 trillion from N11.73 trillion in 2018, largely due to sustained primary market activities throughout the year, most notably the listings of MTN Nigeria Communications Plc and Airtel Africa,” he said.
Onyema said the NSE indices also posted negative returns during the year with the NSE Consumer Goods Index being the most impacted, declining 20.83 per cent, followed by the NSE Main Board Index and NSE Lotus Islamic Index, which dropped by 20 per cent and 17.87 per cent respectively. According to him, the NSE Insurance Index and the NSE Premium Index were the least impacted, declining by 0.52 per cent and 3.59 per cent respectively.
He disclosed that the equity market turnover decreased by 19.7 per cent from N1.2 trillion recorded in December 2018 to N0.96 trillion in December 2019, noting that the Financial Services Sector, which accounted for over 50 per cent of total activity remained the highest traded in volume and value, as was the case in 2018.
“To support the equity market in 2019, we rolled out various new initiatives such as a new market structure to enhance liquidity and ensure overall market stability alongside efficiency, as well as launched the beta version of the X-Mobile App (a dynamic and user-friendly mobile app) to boost retail investors participation,” he said.
The NSE boss noted that the fixed income product market performed exceptionally well in 2019, as market capitalisation increased by 20.42 per cent to N12.92 trillion from N10.72 trillion in 2018. “Turnover also increased by 389.26 per cent when compared to 2018. Capital raising was dominated by the federal government, being responsible for 60 per cent of bond issuances during the period in a bid to finance fiscal and infrastructure deficits.
“The year 2019 saw the groundbreaking listing of Access Bank Plc’s N15 billion Green Bond, the first of its kind to be issued by an African corporate. We also saw the listing of North South Power Company Limited’s N8.5Bn corporate infrastructure Green Bond, which was oversubscribed by 60 per cent, with firm commitments from twelve institutional investors including nine pension funds. Capital raising by corporates increased by 321.61 per cent with a total of N132.68 billion raised in 2019,” he said.
According to him, in addition to the above accomplishments, the NSE signed an MoU with the Luxembourg Stock Exchange (the largest Green Bond listing platform in the world) at the World Federation on Exchanges (WFE) conference held in Singapore. “The MoU is geared towards promoting cross-listing and trading of Green Bonds in Nigeria and Luxembourg. We believe relationships of this nature, which foster co-opetition, further enhances our ability to deliver greater value to our stakeholders,” he said.
In the Exchange Traded Fund (ETF) market, he said they saw the listing of Greenwich Alpha ETF from Greenwich Asset Management Limited which tracks the NSE 30 index. “Despite the 61.37 per cent decline in trade volumes, 46.43 per cent fall in turnover, there was a 7.43 per cent increase in market capitalisation to close the year at N6.58 billion. The best performing ETF was the NewGold ETF as it returned 31.75 per cent indicative of the shift towards more stable investment securities.
“Also, to optimise investors returns, we partnered Afrinvest Securities Limited to launch two new factor indices: the NSE-Afrinvest Banking Value Index and NSE
“Afrinvest High Dividend Yield Index. Similarly, we partnered Meristem Securities Limited to launch the NSE-Meristem Growth Index and NSE-Meristem Value Index to provide a benchmark for the market to gauge the performance of value stocks and growth stocks listed on the NSE,” he said.
Onyema said despite challenges faced, they continued to execute on the NSE’s 2018 – 2021 Corporate Strategy, geared towards: enhancing the customer experience across the value chain; re-organisation for success and capitalizing on mission critical strategic initiatives.
“During the year, we continued to enhance our product portfolio, orchestrated groundbreaking investment forums and listed some of Africa’s largest companies,” he said. “Looking at some of the milestones recorded in 2019, the NSE boss said they facilitated the restitutions and recoveries of shares worth N1.436 billion and also worked with securities lending agents to develop a securities lending pool currently worth about N1.07 billion.
“The NSE launched: X-Mobile App to boost investors’ participation; investor relations data pack to enhance issuers’ stakeholder engagement and mutual fund trading and distribution platform to enhance the retail customer experience,” he added.
On market development, he said the exchange hosted interactive session in collaboration with Coronation Merchant Bank to spur growth in the insurance sector.
“The NSE also hosted an interactive session with stakeholders in the Consumer Goods Sector to discuss the role of the capital market in unlocking value in its sector. We also held the inaugural edition of the Islamic Finance in Nigeria (IFN) forum in partnership with REDmoney Group to harness the Islamic Finance Sector for infrastructure development and economic growth. We equally organised fixed income trading workshop and retail investor coverage workshop to enhance the capacity of dealing members and increase investors participation from various investment classes,” he added.
The Acting Director General of the Securities and Exchange Commission, Ms. Mary Uduk, in this interview with Obinna Chima, on the sidelines of the recently held Annual Meetings of the World Bank and the International Monetary Fund, held in Washington DC, highlighted various initiatives introduced by the regulator to strengthen the capital market. Excerpts:
What is your assessment of the performance of the capital market so far in 2019?
The capital market can be assessed in three areas: Our efforts at policies and regulation, the development in the primary segment of the market as well as secondary market performance. In terms of policies and regulations, we have continued to implement nitiatives as contained in the Capital Market Master Plan. These include e-dividend, direct cash settlement, financial literacy, commodities ecosystem, among others. I will like to tell you that these, and many more, are shaping the landscape of the Nigerian capital market. In terms of the primary market, we have some new equities issues comprising rights, bonuses and global offer of securities. Some corporates have also issued bonds and some have taken advantage of our new rules on Green bonds to issue this innovative product. In addition, we have equally expanded the number and value of our registered Collective Investment Scheme. Now for the secondary market, if you look at the equities market, especially on the NSE, the market has lost about 16 per cent so far this year, on the back of relatively weak economic fundamentals and investors’ sentiments. Meanwhile, the trading statistics in the fixed income segment of the market appears relatively higher. However, in this last quarter of the year, we hope to see some improvement in the equities segment, especially as investors see opportunities to pick low-priced stocks. As you know, even in a down market, there are still opportunities, since what is down has higher probability of rising. So, generally, during the period under review, the market witnessed some relative activities in both the primary and Secondary segment of the market. Also, in the primary market, there was a new trend in the last one year with the listing of the telecomm companies (MTN Nigeria) and also the recent IPO and dual listing of Airtel. The dual listing of Airtel signified the interest of the foreign issuers into the Nigerian capital market. Consequent to the Airtel IPO, some off shore companies are in discussion with the Commission for an IPO that would be dually listed in Nigeria and the United Kingdom.
But what are the reforms SEC is working on to enhance growth and confidence in the market?
Yes, investors’ confidence is central to our job as the regulator of the capital market. People must have confidence to invest, not just in the performance of the market, but that stakeholders will play by the set rules and standard and that the market is efficient. If you look at many of our initiatives, they are designed to achieve these. For instance, the e-Dividend system enables shareholders’ dividend to be paid directly into their bank accounts without the stress of dealing with physical dividend warrants and to reduce unclaimed dividend. Also, the Direct Cash Settlement protects investors from funds mismanagement by ensuring that the proceeds of their shares sales are credited directly into their own account. Similarly, non-interest finance is to boost the confidence of those that may not want to invest in the conventional capital market products. We have also continued to discourage people from investing in Ponzi schemes. Our enforcement action against Dantata Success and Profitable Company and others are necessary to make investors distinguish between regulated and illegal investment schemes. We have also signed a memorandum of understanding (MoU) with the Nigerian Financial Intelligence Unit (NFIU) to curb and combat fraud in the capital market. In the area of financial literacy, you know knowledge is power and it can bring confidence. We have employed various means to bring financial literacy to students, academics, military, and the general public, among others. In the area of multiple accounts regularisation, we have assisted in regularising accounts of investors that used different names during IPOs. This was to enhance market liquidity and reduce unclaimed dividend. So, these and many more we are doing to improve the confidence of existing and potential investors in the Nigerian capital market.
I also need to mention that in order to encourage financial inclusion and with the aim of catching them young, we have developed the curriculum on capital market studies and we are now training the teachers. That is the stage where we are now. With fintechs, we are trying to encourage innovation through the use of technology. At the last Capital Market Committee, we resolved that the capital market is not going to sit on the fence and that is why we set up an implantation Committee on the Fintech Roadmap. This road map will be launched later this month, which shows how important fintech is to us. In addition, we are still in continuous engagement with PenCom to encourage more Pension Fund Administrators’ participation in the market. Many of them have large sums of money under management that they can deploy in our markets. We are also planning to re-constitute the Administrative Proceedings Committee (APC)
How do you think the market has fared in the area of corporate governance and what are your expectations?
As you are aware, companies must have good governance structure and be run properly for them to be profitable and sustainable. This is even more relevant for public companies, given that ownership is separated from control. Thus, shareholders and investors must have comfort that their companies are well governed under the appointed managers. With the scorecard which now allows the commission to assess compliance, investors are now better off. The companies are complying and that is boosting investor confidence. The companies now disclose their level of compliance to corporate governance practices which enhances transparency. Now that we have a national code, we expect to see high level of compliance because we have a national code now in addition to the sector code. With these two layers of code, and reporting structure where they need to report the level of their compliance, it will more confidence to foreign investors to invest in our country. This helps to attract foreign investors. But when there are violations to these codes, we sanction them. As securities regulator, we must push for this, otherwise, investors’ rights and confidence will be eroded and they will not be interested in participating in our market. You can imagine the impact of that on the country’s level of investment and growth. Therefore, we monitor companies’ compliance with our Code of Corporate Governance and when they are in violation, we sanction them appropriately. You are probably aware of some of the recent cases where we are taking action against the management of some companies. There are other cases we are looking into that will become public in due time. We encourage whistle-blowers to use our policies in this respect and bring to our notice any of corporate governance violation case that we may not observe. We are also working towards re-introducing the APC that is more strengthened.
How will you feel if you are able to bring the Nigerian National Petroleum Corporation to list on the exchange?
I will feel great. As you rightly said, the listing of MTN and Airtel was a very positive outcome and they substantial raised the capitalisation of the equities market. It also meant we now have the telecoms sector of the economy represented on the stock market. Therefore, it will be great to also have the petroleum sector well represented on our market and having NNPC will make it greater. Recall that one of the provisions of the Petroleum Industry Governance Bill (PIGB), if approved, is to list 10 per cent and an additional 30 per cent of NNPC companies between five and 10 years. If this is done, it will significantly improve the size and performance of our market. Meanwhile, it will also be important for the NNPC companies to be well commercialised such that they can return positive profits to their shareholders. But, I believe that with the country’s potential in the oil and gas sector as well as with appropriate governance and commercialisation policy, investors, the market and the entire economy will benefit from such listing. And it will be a great achievement indeed.
Investors staked N2.537 billion on 185.944 million shares in 3,083 deals at the stock market yesterday. This, represented an increase of 68.7 per cent compared with N1.504 billion invested in 151.714 million shares in 2,854 deals the previous day.
Despite the increase in value of investment, the Nigerian Stock Exchange (NSE) All-Share Index declined by 0.21 per cent to close at 26,809.92, while market capitalisation shed N27.5 billion to close at N27.5 billion as the bears sustained their hold on the market. However, the decline was lower than the 0.45 per cent fall recorded the previous day.
A look at the activity chart in volume terms showed that Zenith Bank Plc recorded the highest transaction of 60.9 million shares, followed by FCMB Group Plc with 37.3 million shares, while GTBank Plc accounted for 27.9 million shares. In value terms, Zenith Bank remained the leader with N1.1 billion, trailed by GTBank Plc that recorded N744.4 million, while Nestle Nigeria Plc recorded N242.1 million.
Meanwhile, 14 stocks depreciated, led by Champion Breweries Plc with 9.6 per cent, followed by Courtville Business Solutions Plc with 9.0 per cent. Learn Africa Plc shed 8.9 per cent, while Wema Bank Plc and Chams Plc fell by 5.4 per cent. Chams Plc recently appointed a new managing director, Mr. Gavin Young to succeed Femi Williams, who retired after many years of meritorious service.
According to the company, until his appointment, Young was a strategic consultant to key subsidiaries of Chams Plc including Chams Switch Ltd and Chams Mobile Ltd.
“A seasoned fintech professional with a proven track record in managing companies, including subsidiaries of listed companies spanning diverse geographical areas of Africa , Young brings to Chams Plc, over three decades of robust industry experience to raise the bar in all the company’s performance indicators. Young, specifically focuses on all areas of electronic banking and fintech; issuing, acquiring, switching. His primary areas of specialisation are payments switching and processing, developing and managing payment card schemes, terminal and other electronic infrastructure management, transaction processing, transaction acquiring systems, and mobile payments among others,” the company said in a statement.
On the positive side, NASCON Allied Industries Plc led the 12 price gainers with 10 per cent. NPF Microfinance Bank Plc followed with 9.1 per cent, while Forte Oil Plc chalked up 6.1 per cent. Double One Plc appreciated by 5.6 per cent.