By PETER EGWUATU & NKIRUKA NNOROM
In its determination to enhance the stock market breadth and width, the Nigerian Stock Exchange (NSE), has disclosed that it will roll out more Exchange Traded Funds (ETFs) in the year 2013.
The Exchange also stated that it will welcome ETFs developed by other operators in the capital market, saying this will help in enhancing varieties of instruments and boosting the market in general.
While addressing newsmen at a press conference to analyse the performance of the stock market in 2012, the NSE’s Chief Executive Officer, Mr. Oscar Onyema, said, “Continued product innovation by the Exchange, including the commencement of secondary bond market trading and introduction of new indices and ETFs would provide additional incentives.
Speaking on some of the initiatives for 2013, Onyema said, “For ETF, we intend to roll out additional ETFs covering various undermined products and we also intend to introduce the Nigerian depository receipt programmes this year.This would provide access to the trading of companies that are listed in other markets, but have their products heavily used in Nigeria. Also, the effort by the Central Bank of Nigeria, CBN, to achieve single digit inflation and various confidence building measures implemented by the NSE in 2012 would spur the market to a growth path within the year.
Though he feared that problems around liquidity might spill into the New Year, he assured that concerted efforts are being made to address the ugly trend.
His words: “The CBN’s effort to achieve a single digit inflation rate and a lower Monetary Policy Rate ( MPR ) should have a positive impact on the equities market in 2013 and as investors’ confidence building measures implemented by the NSE mature, we expect that a growth trend similar to that experienced in fourth quarter of 2012 will spread into 2013.”
“On the fixed income side, we anticipate that the relative attraction of the FGN bonds will continue for local and global investors as a result of record high yields. With the forthcoming inclusion of the Nigerian FGN bonds in the Barclays Emerging Markets Local Currency Bonds Index, it will put the nation’s bonds in the international spotlight,” he added.
He noted that expected entrance of foreign issuers such as the International Finance Corporation into the Nigerian bonds market this year would help to lift the market performance.
He listed other contributing factors to the optimism on the capital market to include early passage of the national budget which, according to him, created the impression that fiscal policy is prioritised; the pronouncement by the Federal Government to begin investing proceeds of the Sovereign Wealth Fund (SWF) in the capital market in March 2013, as well as elimination of value added tax,VAT, and stamp duties from transaction charges in the market.
According to him, Continuing, he said, “We intend to conclude work on transaction cost analysis framework that will allow us to benchmark how effective or extensive we executive an order in this market as compared to other emerging or frontier markets, and that will give us a clear understanding of where action needs to take place. We also intend to continue the work on market optimisation.