CEO of Nigerian bourse sees return of investor confidence in 2016

14 Jan 2016
Martins Hile


The NSE CEO emphasized that the bourse is committed to being a credible platform for financing the Nigerian economy in 2016. 

Oscar Onyema, Chief Executive Officer, Nigerian Stock Exchange

The Chief Executive Officer of Nigerian Stock Exchange, Oscar N. Onyema, said on Thursday that effective communication of government policy, increased tax revenue and improvement in security will attract more portfolio investors to Nigeria in 2016.      

Onyema who gave a presentation, “2015 Market Recap, 2016 Outlook,” to journalists at the NSE, provided a global economic review in which he said a decline in commodity prices, an overhang from previous credit crisis, and other factors led to a slump in global economic growth in 2015. Average GDP growth rate in sub-Saharan Africa slowed to 3.8% in 2015, from 5% growth rate in 2014.

Onyema said the Nigerian economy grew at 4% in 2015, having experienced significant oil revenue shocks. Inflation was at 9.5% at the end of 2015, having increased from 7.9% recorded at the start of last year. He said the All-Share Index, the benchmark stock index of the NSE, declined by 17.4% in 2015.

According to the CEO of the Nigerian Stock Exchange, the reaction from investors who ditched Nigerian stocks was not unexpected due to the declining market fundamentals. “Nobody can stop such a moving train,” he stated to observations that the NSE has been the worst performing bourse in the world this year already, after the Chinese and the Saudi Arabian stock exchanges.

The NSE’s All-Share Index closed at 24,239.98 points on Thursday, having closed at 28,642.25 points on December 31, 2015. This is a decline of 15.4% in the first two weeks of 2016. Given this data, the NSE’s market capitalization within the same period has dropped by N1.5 trillion ($7.6 billion).

Mr. Onyema said political risk, currency volatility and commodity prices were responsible for the market outlook in 2015. Increased oil production in North America has led to an oversupply in the global oil market, leading to prolonged slump in oil prices. Readjustments in the Chinese economy has also led to the plunge in global commodity prices. For Nigeria, oil provided over 70% of government revenues, which has led to a significant decline in the revenue of the federal government.  

For his 2016 outlook, the NSE Chief Executive said, the country is “poised for moderate economic growth in 2016.” He said as the government works to provide clarity to policy direction, increase monetary policy credibility, raise tax-to-GDP ratio and improve security, investors will return to Nigeria. He also said the NSE will increase “the repertoire of products for investors to invest.”

Mr. Onyema said the NSE has the agenda to help the Federal Government of Nigeria to finance the deficit in the 2016 budget and the Medium-Term Expenditure Framework (MTEF). The government plans to raise N984 billion ($4.97 billion) in domestic borrowing and N900 billion ($4.55 billion) from the foreign debt market to fund the N2.22 trillion deficit in the N6.08 trillion ($30.71 billion) 2016 budget proposed by President Muhammadu Buhari.

The Debt Management Office announced on Monday its calendar for the issuance of N390 billion ($1.97 billion) of sovereign bonds in the first quarter of 2016. Onyema said NSE is working with DMO on the issuance.

The NSE CEO emphasized that the bourse is committed to being a credible platform for financing the Nigerian economy in 2016. He also said the NSE will continue its demutualization this year.   

Having launched three new Exchange-Trade Products in 2015 along with three new indices, the NSE will deliver derivatives in 2016, Onyema stated today. This would add to the Nigerian bourse’s current products which are equities, fixed income and exchange-traded products.    

Martins Hile is Editor, Financial Nigeria magazine

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