nse review of 2010 and outlok for 2011

8/7/2019 NSE review of 2010 and outlok for 2011

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Review of Market Performance in 2010and

the Outlook for 2011

Presented by

Emmanuel Ikazoboh

Interim Administrator, The Nigerian Stock Exchange

forThe Nigerian Stock Exchange Annual Review

Stock Exchange House, Lagos

10 January 2011 1The Nigerian Stock Exchange


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Economic Review

2010 Market Review

2011 Outlook

2011 Focus CSCS Review

Questions & Answers

Welcome

10 January 2011 The Nigerian Stock Exchange 2


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GDP growth averaged 7.6%* Oil contributed 84% of GDP

Other major contributors: Agriculture, Wholesale/RetailTrade, Telecommunications

Government revenue was N5,297.18 billion

11% below budget requirement

Crude oil receipts accounted for 74.5%

Revenue gap bridged by local borrowing and ECA

withdrawals Balance of ECA at year end was $300 million

2010 Economic Review: Q1-Q3


*At the end of Q3 2010. Expected 8.29% growth in Q4 would produce an average GDP of 7.8% for 2010.


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CBN-driven solutions to economic growth challenges Continued banking reforms to foster financial stability

Strategic management of the Naira and foreign exchange

Small & Medium Enterprises Credit Guarantee Scheme

(SMECGS) to avail credit to manufacturers and SMEs

Power & Aviation Intervention Fund (PAIF) to stimulateprivate sector investment

AMCON commenced operations in Nov 2010

Approved the purchase of all margin loans in the bankingsector estimated at N2.2 trillion

N1.04 trillion non-performing loans purchased in Dec 2010

2010 Economic Review



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National total public debt at $32.5 billion in Sep 2010 16.8% of GDP

$4.5 billion external debt and $28 billion internal debts

Debt-to-GDP ratio approximately 17 (global limit set at 40)

Inflation at 12.8% in Nov 2010

11-month average of 13.9%

MPR increased in Sep 2010 to curb inflation (6% to 6.25%) NIBOR averaged 8.62%




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Country financial ratings Standard & Poor: B+ long-term rating with stable outlook

Standard & Poor: B short-term foreign and local currencysovereign credit rating with stable outlook

Fitch: BB sovereign credit rating with negative outlook

Contributory pension scheme

4.3 million workers registered with PFAs by Jul 2010

N1.8 trillion in assets accumulated by Aug 2010

Revised investment guidelines released in Dec 2010 Allowing investment in specific infrastructure funds and debt

instruments




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Review of Market Performance in 2010

and the Outlook for 2011

2010 Market Review



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Harsh operating environment Mixed performance by listed companies

Declining income and savings

Rise in unemployment and weaker purchasing power

Inflationary pressure

Lack of investor confidence

Margin loan overhang

Absence of margin facilities Bank withholdings of equity acquisitions by investors

Reduction of bank exposure to margin loans

2010 Market Review: Overview



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Q1: Bullish market emerged Reduction in deposit interest rates

Q2: Bearish market emerged

Allegations/counter-allegations between council/executives

Q3: Bearish market persisted

SEC intervened in the NSE

Q4: Bullish market re-emerged

SEC investigative report of the NSE leaked AMCON commenced operations

Extension of trading hoursby 2 hours

2010 Market Review: By Quarter



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2010

93.33b Shares

N797.55b Value

3.2% of GDP

9.25%

16.3%

2010 Market At-a-Glance

2009

102.85b Shares

N685.72b Value

2.9% of GDP

9.25%

71.43%


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Federal Bonds, 0

Ordinary Shares (All),

93,335,000,000

Preference Shares, 0

State Bonds, 13,000Corporate Bonds, 0Volume

2010 Market Review: Activity

13 December, 2010 The Nigerian Stock Exchange 11

2009 AVG. DAILY ACTIVITY

414.73m shares worth N2.8b

2010 AVG. DAILY ACTIVITY

377m shares worth N3.2b

Meanwhile

13.8b units valued at

N15.34t traded in

the OTC market

(N14.1m)

(N797.55b)


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Company Volume Traded(Billion Shares)

% of TotalVolumeTraded

Zenith Bank Plc 6.302 6.8

First Bank of Nigeria Plc 5.442 5.8

Guaranty Trust Bank Plc 4.291 4.6

United Bank for Africa Plc 4.253 4.6

Access Bank Plc 3.456 3.7

FinBank Plc 3.200 3.4

Skye Bank Plc 2.979 3.2

Fidelity Bank Plc 2.952 3.2

Diamond Bank Plc 2.778 3.0

Oceanic Bank International Plc 2.049 2.2

20 Most Active Stocks in 2010



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Company Volume Traded(Billion Shares)

% of TotalVolumeTraded

Bank PHB Plc 1.819 2.0

First City Monument Bank Plc 1.748 1.9

Transnational Corporation of Nig. Plc 1.693 1.8

Union Bank of Nigeria Plc 1.544 1.7

AIICO Insurance Plc 1.540 1.7

Japaul Oil & Maritime Services Plc 1.524 1.6

Guaranty Trust Assurance Plc 1.427 1.5

Sterling Bank Plc 1.391 1.5

Capital Oil Plc 1.353 1.5

Starcomms Plc 1.099 1.2

20 Most Active Stocks contd.


Conglomerates

Insurance

Maritime

ICT

ASEM

Banking


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Securities 264 securities with market cap of N9.92 trillion

Increase of 41.12% New listings (equities and government bonds)

Price appreciation of equities

Equities

217 equities with market cap of N7.92 trillion

Increases: 17 sub-sectors between 3.9% and 622.05%

Decreases: 16 sub-sectors between 2.8% and 48% 20 most capitalised companies have market cap of N6.15t

62% of total securities market cap or 78% of equities market cap

2010 Market Capitalisation



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-

50

100

150

200

250

300

350

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10

NumberListed

Equities

Listed Equities & Market Cap

Market Cap. (Millions) Listed Equities

217 equities

N7.92tr


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Government Bonds 40 listed securities with market cap of N1.94 trillion

4.33% decrease from December 2009

Corporate Debt

7 listed securities with market cap of N56.4 billion

600.4% increase from December 2009




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cc

2010 Review: New Issues contd.



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15 securities delisted 12 fixed income securities due to maturity

3 companies

12 companies in the final stage of delisting

7 companies from the Main Board

5 companies from ASEM

2010 Market Review: Delistings


2010 M k t R i P iti


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Extension of trading hours Results in a one month period

5% increase in number of deals

15.6% increase in volume traded

24.8% increase in value traded

2010 Market Review: PositiveStrides



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-

10,000,000,000.00

20,000,000,000.00

30,000,000,000.00

40,000,000,000.00

50,000,000,000.00

60,000,000,000.00

70,000,000,000.00

BEFORE EXTENSION

(06/11/10 -

05/12/10)

AFTER EXTENSION

(06/12/10 -

06/01/11)

54,444,012,50

5.88

67,947,542,83

6.45

VALUE

Extension of Trading Hours


5,800,000,000

6,000,000,000

6,200,000,000

6,400,000,000

6,600,000,000

6,800,000,000

7,000,000,000

7,200,000,000

7,400,000,000

7,600,000,000

BEFORE EXTENSION

(06/11/10 - 05/12/10) AFTER EXTENSION

(06/12/10 - 06/01/11)

6,458,848,071

7,463,207,094

VOLUME

2010 M k t R i P iti


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Trading platform selection Establishment of the Index Committee

Strict enforcement of rules and regulations

Suspension of 74 dealing member firms for failure tosubmit audited accounts

42 companies placed on technical suspension forinfractions of listing rules (17 no longer on suspension)

15 companies placed on full suspension for violation of

listing rules 7 companies recommended for delisting

2010 Market Review: PositiveStrides contd.


2010 Market Re ie Dealing


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242 dealing member firm inspections completed Resolution of 135 complaints out of 366 (291 against

active dealing member firms)

8 out of 9 new firms approved to begin trading

6 firms approved to operate new branch offices

2010 Market Review: DealingMembers



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2011 Outlook



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Drivers of economic growth in the medium term Non-oil sector

Investments in critical infrastructure

Continued focus on promoting macroeconomic stability

Oil sector Increase in local refining capacity

Reduction in importation

Reduction in government subsidy expenditure

2011 Outlook: Growth



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Drivers of economic growth in the medium term Capital market

Supporting government agencies sourcing of funds

Improved asset valuation with AMCONs purchase of NPLs

Recapitalisation as a result of bank M&As Supporting manufacturing companies strengthening of capital bases

2011 Outlook: Growth contd.



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Government borrowing from the public (bonds) Could crowd out the private sector

Inflation, as a result of:

64% increase in minimum wage to N18,000

Rising government borrowing

Expected increase in political spending

Releases from the ECA

Huge fiscal injections by AMCON

Multi-taxation of businesses and investors

Non-acutalisation of the privatisation scheme

2011 Outlook: Growth Risks



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Operate an efficientand transparentbusiness that iscommitted to disciplineand integrity

Facilitate a seamless transition to a new CEO

Maintain a zero-tolerance policy

Broaden and deepen the market

Increase investor confidence

2011 Objectives



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1. Enforcement2. Investor protection & education initiatives

3. Market development

4. Capacity building of market participants

5. Product development

6. Transition to CEO

7. Strategic alliances

2011 Outlook: NSE Focus



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3. Market Development Full dematerialization

Introduction of market makers

Development of retail arm of the bond market

Official launch of the ASEM/PRIPEX market Upgrade of the trading platform

4. Capacity Building of Market Participants

Training and education

Product development

2011 Outlook: NSE Focus contd.



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5. Product Development New products

Exchange Traded Funds (ETFs)

Shariah compliant products

Information and data products

Government sovereign bonds*

Existing products Real Estate Investment Trusts (REITs)

Debentures and bonds



*DMO and CBN products. Benefits of trading on the exchange include increased FGN revenue potential, aswell as complete transparency.


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6. Transition to CEO Follow through on multi-stage executive recruitment

process, including SEC approval component

Meet the Apr 2011 deadlline

7. Strategic Alliances Mutual understanding with the JSE

Affiliations with global trade organisations, e.g., WorldFederation of Exchanges, IOSCO, etc.

Mutual cooperation with regional exchanges through ASEA




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CSCS Review


2010 Market Review: CSCS


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Shareholders 4.5 million shareholders in the CSCS system

62 shareholder requests for share certificates (down 43.1%from 2009)

437 shareholders used holdings in CSCS depository ascollateral for loan facilities (down 71.8% from 2009)

886,124 share certificates dematerialised

Trade Guaranty Fund at N52 million

2010 Market Review: CSCSReport



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Q&A Session



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nse review of 2010 and outlok for 2011

Documents