The Director General-Head of Strategy of EFG Hermes Research, Mr. Simon Kitchen, has warned that among the many tasks ahead of the incoming Nigerian administration would be to ensure that msci, the border index provider, does not remove Nigeria from its index.

Kitchen said this during his presentation at NGX’s 2022 Market Roundup and 2023 Outlook held in Lagos on Wednesday.

The MSCI Frontier Markets Index captures representation of large and mid-cap companies in 28 Frontier Markets (FM) countries. The index includes 96 constituents, covering about 85% of the free float-adjusted market capitalization in each country.

Plans to eliminate Nigeria: Kitchen stated that MSCI has been considering removing Nigeria from its border index for a few months, but has deferred the removal until June 2023.

  • He noted that among the many issues the incoming administration must address is tackling the problem head-on to create more confidence in the local stock market.

The task of the new administration: The new government in the first half of 2023 must make sure to solve the currency issue to prevent Nigeria from being delisted from the border index to create more inflow into the Nigerian stock market of foreign investors because right now the influx is limited.

performance 2022: NGX Chief Executive Officer, Mr. Temi Popoola, said that in 2022, the performance of the stock market as evidenced by the 19.98% increase in the NGX All-Share Index, which increased from 40270.72 to 51,251.06 just as capitalization Market share also closed at a high of N27.92 trillion, up from N21.06 trillion a year earlier. He said total turnover from operations in 2022 improved by 27% from N916 billion to N1.16 trillion year-on-year from 2021.

  • “Market share was heavily skewed towards domestic investors. The fixed income market saw a slight rebound in turnover to N3.89 billion in 2022 from N3.53 billion recorded in 2021. This represents a year-on-year increase of 10.20%.
  • “The market capitalization of Exchange Traded Funds increased from N7.35Bn in 2021 to N8.42Bn in 2022, representing a 14.56% increase in market capitalization. Tracking the performance of the NGX 30 Index, the Stanbic IBTC ETF 30 was the best performing ETF in 2022, starting the year at N68.5 and closing at N245, reflecting a return of 257.66%. ETF transactions fell from N34.22 billion in 2021 to N211.02 million in 2022. This represents a 99.38% decrease in ETF turnover.”
  • “Overall, this marked a good year for the stock market despite global macroeconomic headwinds,” Popoola added.

Performance Drivers: Popoola said the year-over-year performance can be partly attributed to the N4.3 trillion in listings registered by NGX in the equity and fixed income markets. He said:

  • “These listings included the raising of N2.54 trillion bond listings for the Federal Government of Nigeria, as well as share listings totaling N1.35 billion from companies such as BUA Foods Plc and Geregu Power Plc.
  • “The listing of corporate bonds also contributed significantly to the performance of the Exchange, with a total of N364.78 billion raised through listed instruments such as N177.12 billion senior unsecured bonds from Dangote Industries Plc, Lagos Free Zone Company SPV Plc N25 billion fixed rate infrastructure bonds and Ardova Plc N11.44 billion and N13.86 billion fixed rate Senior Unsecured Notes. NGX also listed FGN’s $4 billion multi-tranche Eurobonds, further demonstrating its diversity of offerings and ability to attract a wide range of companies looking to raise capital.
  • “The value of these listings shows NGX’s commitment to positioning itself as a premier venue for capital raising and formation, as well as its continued development efforts in the Nigerian capital market after its demutualization. The Exchange’s ability to facilitate a wide range of transactions and attract a wide range of business underscores its position as a leader in innovation and progress in the financial market on the African continent.”

Outlook for 2023: Speaking about the market outlook, Popoola said NGX would take a flexible approach to strategy execution in 2023, doubling down on its 2022 achievements and expanding on various levers.

  • “As you know, the NGX Technology Board Listing Rules were approved by the main regulator, the Securities and Exchange Commission in December 2022. With this, we aim to drive more technology companies to the Stock Exchange and deepen capital formation in the technology sector. Currently, we are in consultations with the stakeholders of the sector and we are confident of securing some big names within the year”, added the CEO during his intervention at the event.
  • “Regarding strategic partnerships, we will forge more with development finance institutions and banks, both local and international, to further develop the market. Our goal is to do more in trading where we improve data dissemination to attract a larger investor base, especially from the retail side. We will use the listings as a vehicle to meet strategic aspirations as the new dispensation arrives through increased promotion and engagement.
  • “NGX believes that sustainability is not only important but also a profitable frontier of its business and is working on developing a framework for carbon credit trading certifications, pending regulatory approval. In the digital transformation of the capital market, the Stock Exchange is working on the launch of USSD in collaboration with Telcos and Banks; unlock African capital markets through payment integration with Afreximbank’s pan-African payment settlement system.”