2013 market outlook - nigerian stock exchange 2012 market... · click to edit master title style...
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Presented by
Oscar N. Onyema
CEO
January 17, 2013
2013 MARKET OUTLOOK
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• Summary
• 2012 Market Review Macro Economic Performance
Capital Market Snapshot
2012 Achievements
• 2013 Outlook Projections
2013 Key Objectives
• Conclusion
• Q&A
The Nigerian Stock Exchange 2
Outline
Rev 4/23/2013
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Rev 4/23/2013 The Nigerian Stock Exchange 3
Summary
• The Nigerian Stock Exchange (NSE) was one of the top performing exchanges globally in 2012.
• The NSE All Share Index (ASI) grew 35.45%, and average daily turnover for equities was N2.65 billion($17.07 million), up 4.74%.
• The capitalization of listed equities grew 37.36% from N6.54 ($41.87 billion) to N8.98 trillion ($57.83billion).
• The year closed with two (2) new equity listings on the Main Board and 10 new bond listings.
• In 2012, the NSE executed a number of key strategic initiatives, among which were Primary MarketMaking, a suite of value-added services (X-value), and investments in two alternative tradingplatforms.
• The outlook for 2013 is largely positive for both the Nigerian economy and the Nigerian capital marketas changes implemented in 2012 begin to crystallize in 2013.
• By the end of 2013, the NSE expects to be well-positioned to adapt our business to meet the needs ofour clients, and to enable the Nigerian capital market absorb the forces of change reshaping globalfinancial markets and the global exchange landscape.
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Rev 4/23/2013
Nigeria in 2012
4The Nigerian Stock Exchange
Highlights
• Government policy on fuel subsidy in January 2012 stalled economic activities in the first quarter
• GDP growth - 6.48% (Q3 2012)
• Double-digit inflation - 12.3% (Nov 2012)
• Double-digit lending rates - MPR of 12% (Nov 2012)
• The economy decreased it’s dependency on Oil and Gas as a percentage of GDP (13.42% contribution in Q3 from 15.80% in Q1)
• Agriculture’s contribution to GDP increased from 34.47% in Q1 to 42.62% in Q3
• Nigerian government bonds included in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM)
Click to edit Master title style|NSE INDEX PERFORMANCE
Nigerian Industry Sector Performance
Rev 4/23/2013 The Nigerian Stock Exchange 5
-30.53%
-17.45%
23.84%
35.45%
42.29%
44.21%
44.63%
-50% -30% -10% 10% 30% 50%
Bloomberg NSE Oil/Gas
Bloomberg NSE Insurance
Bloomberg NSE Banking
NSE All Share Index
Bloomberg NSE Consumer Goods
NSE Lotus Islamic
Bloomberg NSE 30
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Rev 4/23/2013 The Nigerian Stock Exchange 6
Global Exchange Performance
2012 Key Index Performance
38.72%35.45%
26.61%24.46%
22.71%20.70%
17.72%15.91%
13.41%
7.39% 7.26% 5.84%
0.56%
-8.00%
-14.46%-20%
-10%
0%
10%
20%
30%
40%
50%
Nai
rob
i ASI
Nig
eri
a A
SI
Gh
ana
Co
mp
.
EGX
10
0
FTSE
/JSE
ASI
HA
NG
SEN
G
WIG
20
NA
SDA
Q C
om
p.
S&P
50
0
IBO
VES
PA
DJI
A
FTSE
10
0
FTSE
AIM
SEM
DEX
MA
SI
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2011 2012 % Change
Total Market CapitalizationN10.28 trillion
$62.23 billion
N14.80 trillion
$95.32 billion43.97%
Equities Market CapitalizationN6.54 trillion
$41.87 billion
N8.98 trillion
$57.83 billion37.36%
Bonds Market CapitalizationN3.74 trillion
$23.94 billion
N5.82 trillion
$37.48 billion55.61%
NSE All Share Index 20,730.63 28,078.81 35.45%
Bloomberg NSE 30 Index 923.77 1,336.07 44.63%
Bloomberg NSE Consumer Goods 589.60 838.97 42.29%
Bloomberg NSE Banking Index 274.26 339.63 23.84%
Bloomberg NSE Insurance Index 143.54 118.49 -17.45%
Bloomberg NSE Oil/Gas Index 220.11 152.92 -30.53%
NSE Lotus Islamic Index 1,226.74 1,769.07 44.21%
Total Volume - Equities 82.30 billion 89.15 billion 8.32%
Total Value (Turnover) - EquitiesN622.60 billion
$3.99 billion
N657.77 billion
$4.24 billion5.65%
Avg. Daily Volume - Equities 334.54 million 359.50 million 7.46%
Avg. Daily Value (Turnover) - EquitiesN2.53 billion
$16.20 million
N2.65 billion
$17.07 million2.71%
Turnover Ratio - Equities (%) 9.52 7.33 -23.00%
No. of New Issues 11 12
Value of New IssuesN1,810.39 billion
$11.59 billion
N195.36 billion
$1.26 billion
Rev 4/23/2013 The Nigerian Stock Exchange 7
Market Snapshot & FPI
FPI MARKET ACTIVITY
$4,893
$6,643
$2,851
$3,855
$5,511
$4,716
$0
$2,000
$4,000
$6,000
$8,000
2007 2008 2009 2010 2011 2012
Mill
ion
s*All December figures not yet reported.
*
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Rev 4/23/2013 The Nigerian Stock Exchange 8
Market Snapshot
EQUITIES
• Number of listed companies at the end of 2012 decreased from 194 to 191.
• Number of listed equities also declined to 198 from 201.
• Zero IPOs , two (2) new listings on the Main Board.• Four (4) companies delisted.• Three (3) banks delisted and relisted in compliance
with the holding company structure mandate by the Central Bank of Nigeria (CBN).
NUMBER OF NEW ISSUES (Bonds and Equities)
11
12
10
11
12
13
2011 2012
No
. of
Issu
es 9.09%
HIGHLIGHTS
• Total market for capitalization for equities and fixed income securities increased 43.97% to N14.80 trillion ($95.32 billion).
• Market capitalization for all listed equities on the Main Board and on the Alternative Securities Market (ASeM) rose by 37.36%. 9.59%
39.70%
43.78%
0% 10% 20% 30% 40% 50%
Small Cap
Large Cap
Mid Cap
Small Cap Large Cap Mid Cap
% GROWTH IN MARKET CAPITALIZATION
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Rev 4/23/2013 The Nigerian Stock Exchange 9
Market Capitalization by Segment
MAIN BOARD ASeM
BONDS
24%
70%
6%
CORPORATE BONDS/DEBENTURES
GOVERNMENT BONDS-FEDERAL
GOVERNMENT BONDS-STATE & LOCAL
0% 1% 1%
32%
34%
1%
1%
27%
0%2% 1%
AGRICULTURE
CONGLOMERATES
CONST./REAL EST.
CONSUMER GOODS
FINANCIAL SERVICES
HEALTHCARE
ICT
INDUSTRIAL GOODS
NATURAL RES.
OIL AND GAS
SERVICES
1% 2% 0% 3%0%
37%
57%
CONST./REAL EST.
CONSUMER GOODS
HEALTHCARE
INDUSTRIAL GOODS
NATURAL RES.
OIL AND GAS
SERVICES
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622.6
657.77
600
610
620
630
640
650
660
670
2011 2012
NG
N (
=N
= b
rilli
on
) 5.65%
TOTAL TURNOVER (N) - EQUITIES
Rev 4/23/2013 The Nigerian Stock Exchange 10
Market Snapshot (contd.)
15% 17%
31% 36%
67%56%85% 84%
69% 64%
33% 44%
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010 2011 2012
% o
f to
tal v
alu
e tr
aded
Foreign Investors Local Investors
FPI CONTRIBUTION
*All December figures not yet reported.
*
BONDS
• Market capitalization of bonds soared 55.61% to N5.82 trillion ($37.48 billion).
• Seven (7) new State and Corporate bond issues, and three (3) Federal Government bond issues.
• The value of cash transactions for government bonds, fell for the third consecutive year by 11.14%, to N7.10 trillion ($45.73 billion).
• Increased focus on Treasury bills (T-bills) in 2012; cash transactions valued at N13.92 trillion ($89.65 billion), a 28.75% increase over the previous year
TURNOVER HIGHLIGHTS
• Total turnover was N657.77 billion ($4.24 billion).
• Average daily turnover was also up 4.74% compared to -20.71% experienced in 2011.
• Turnover ratio for 2012 was 7.33% down 23.00% from 2011 (9.52%).
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Rev 4/23/2013 The Nigerian Stock Exchange 11
The Way Forward
1. Targeted business development efforts
2. Stronger regulatory environment
3. 21st
century technologies
$1 Trillion Market Cap by 2016
4. Growth enabling market structure
The “Five Pillars”
5. First-rate investor protection programmes
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Rev 4/23/2013 The Nigerian Stock Exchange 12
Results of Collaboration
15,000
20,000
25,000
30,000
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
Ind
ex V
alu
e
In September, the NSE launches its Market Making initiative with 10 stockbroker firms.
The year starts off slow due to the removal of the fuel subsidy.
Market experienced steady growth as Investors start returning to the market.
The market experiences a growth of 10.66% to the end of the year following the implementation of the NSE’s 2012 key initiatives.
10.66%
Click to edit Master title style|NSE PILLARS ACHIEVEMENTS
Targeted Business Development Efforts NSE Lotus Islamic Index
Xvalue Services
Strong Regulatory Environment New Listing Rules
Broker TraX Tool
X-Compliance Report
X-Qual Report
21st Century Technologies Strategies New Web Site
X-Net VPN
X-Gen Development
Market Data
Growth-Enabling Market Structure Equity Primary Market Making
Securities Lending and Short Selling
First-Rate Investor Protection Programs Financial Literacy
Investor Protection Fund Launch
Market Development and Improved Operational Efficiency VAT and Stamp Duty Elimination
Margin Debt Relief
Investments in OTC Trading Platforms
Rev 4/23/2013 The Nigerian Stock Exchange 13
2012 Achievements
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Rev 4/23/2013 The Nigerian Stock Exchange 14
2013 Outlook
• Fiscal drag for the US projected in 2013, while European sovereign debt fears ease.
• Concerns over China’s growth begin to ease and stronger growth expected.
• Projected global growth for 2013 is 2.4% (OECD).
GLOBE
• The search for gains by global investors will further place emerging and frontier markets in the path of increased trading activity and growth.
• 2013 projected growth for Africa at 4.8%.
• African nations expected to maintain positive growth trajectory - Ghana 7.7%, Angola 7.1%, Nigeria 6.6%, Kenya 5.5% and South Africa 3.6% (ADB).
AFRICA
• Projected national growth for 2013 of 7.67% (NBS).
• Falling inflation expected as a result of government policy on fuel subsidy, however, CBN restrictive monetary policy expected to help counter effects.
• Positive Government initiatives to continue - increasing power generation, financial inclusion, agricultural transformation, and strengthening fiscal discipline are expected to carry over into the New Year.
NIGERIA
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• The Nigerian Capital Market will continue to face challenges around liquidity and depth, but concerted efforts to address the situation are underway.
• Expect growth trend experienced in Q4 2012 to extend into 2013 as investor confidence measures by the NSE mature.
• Anticipate the relative attractiveness of FGN bonds to continue for local and global investors, as a result of record-high yields and new attractive issuance.
• National bonds to remain in the international spotlight due to their upcoming inclusion into Barclay’s Emerging Market Local Currency Bond Index.
• Foreign issuers such as the International Finance Corporation (IFC) are expected to enter the Nigerian bond market.
• Contributing factors to optimism about the capital market include:
– Early passage of the national budget;
– Pronouncement to begin investing proceeds of the Sovereign Wealth Fund (SWF) in March 2013;
– Elimination of VAT and stamp duties, expected to take effect in 2013; and
– Continued product innovation by the Exchange, including the commencement of secondary bond market trading, and introduction of new indices and ETFs.
Rev 4/23/2013 The Nigerian Stock Exchange 15
Nigerian Capital Market and NSE Outlook
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NSE PILLARS SHORT-TERM (2013)
1. Targeted Business Development Efforts • ASeM Re-Launch• Derivatives Feasibility Study• Product Innovation (e.g. ETFs, NDRs)
2. Strong Regulatory Environment • Enhanced Rulebook• Issuer’s Portal • Improved Cooperation with Other Exchanges and Global
Organizations• Whistle Blowing Programme
3. 21st Century Technologies Strategies • Delivery of New Trading Platform• Automation of Transaction Lifecycle
4. Growth-Enabling Market Structure • Transaction Cost Analysis • Market Optimization
5. First-Rate Investor Protection Programs • Financial Literacy Programme• Operation of Investor Protection Fund
6. Market Development and Improved Operational Efficiency • Policy Advocacy• Corporate Social Responsibility (CSR) Programme• Demutualization
Rev 4/23/2013 The Nigerian Stock Exchange 16
Key 2013 Initiatives
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Rev 4/23/2013 The Nigerian Stock Exchange 17
Conclusion
• The Exchange will continue with innovations centered on technology and product development, as well as on advocating changes to policy.
• By the end of 2013, we will have established our technology competitiveness, restored our regulatory soundness, and advocated the policy changes necessary to enable us absorb the forces of change.
• The Exchange will be well-positioned to adapt our business to meet the shifting needs of its clients.
• Achieving competitiveness will be at the forefront of the Exchange’s agenda.
• The Exchange will work to achieve its goal of transforming the Nigerian capital market and helping to facilitate the emergence of the next group of ‘African Champions’.
• We are on course to delivering service excellence, and positioning ourselves as the undisputed “gateway to African markets”.
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Thank You
Questions & Answers
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Thank You
Stock Exchange House
2 - 4 Customs Street
P.O. Box 2457, Marina
Lagos Island, Lagos, Nigeria
Thank You