By Peter Egwuatu
The Nigerian stock market in the year 2020 will certainly go down in the history books as one of the most challenging years of modern existence.
However, the Nigerian Stock Exchange, NSE during the year under review overwhelmed the storm through innovation and technology as value of listed securities hit N1.72 trillion.
Early in the year, a global pandemic took the world by storm necessitating a significant change in life and work as we know it.
On 23 and 24 March 2020, the Exchange took steps to preserve the health and safety of its stakeholders by activating its Business Continuity plan which saw the transition to working from home and remote trading in response to the spread of the Coronavirus, COVID-19. Since then, the Exchange has maintained seamless working and trading operations, experiencing zero down time.
Furthermore, NSE has displayed remarkable resilience, continuing to deliver on its mandate to provide a platform for Issuers and Investors to meet their financial objectives even in the toughest of times. Since March 2020, NSE has listed securities worth over $4.5 billion (N1.72 trillion) while it provides support for secondary market activities. Stakeholders have certainly reaped the benefits of the Exchange’s efforts over the course of 2020, evidenced by increased activity in the market.
Players in the Nigerian equities market appear to be riding the waves of the market rally with market capitalisation currently at N19.2 trillion while Year-to-Date (YTD) return standing at 37.1% as at Friday, 18 December 2020. At least twice in 2020, the NSE has been dubbed the best performing exchange in the world according to Bloomberg. It would also be recalled that on Thursday, 12 November 2020, the NSE All Share Index (ASI) posted its largest daily gain in more than five years. The ASI rose beyond the set threshold of 5%, triggering a 30-minute trading halt of all stocks for the first time since the circuit breaker was introduced in 2016.
What is also noteworthy is that as a multi-asset Exchange hub, the Exchange continues to recognise opportunities in the alternative investment asset space and is working assiduously with stakeholders to deepen market activity across these asset class. In the fixed income space, capitalization has risen to N17.7 trillion from N12.9 trillion as at the end of 2019 as a result of increased listing activity from the Federal Government and Nigerian corporates.
The Exchange Traded Fund (ETF) segment of the market continues to enjoy investors’ attention with the NewGold ETF returning 78.36%, the Vetiva S&P Nigeria Sovereign Bond ETF returning 45.93%, the Lotus Halal Equity ETF returning 43.99%, and the Vetiva Industrial ETF returning 55.79% as at Wednesday, 2 December 2020. In September 2020, The Exchange listed two new ETFs from Meristem Wealth Management Limited – Meristem Growth (MERGROWTH) and Meristem Value (MERVAL) ETFs which are expected to further attract market activity.
Following the activation of its Business Continuity Plan and transition to remote working and trading, The Exchange remained resolute in its commitment to ensure zero disruptions to operations for any of its stakeholders. It leveraged its existing digital assets to ensure a continuous flow of information and activity in the market and continues to explore creative solutions to enhance stakeholders’ experience during this period. Consequently, all brokers have access to the requisite platforms to trade remotely and seamlessly including FIX Protocol, X-NET and VPN.
Furthermore, NSE has continued to implement on its commitment improve market integrity, reduce market asymmetry and improve the flow of information into the market with the upgrade of several platforms. In 2020, The Exchange released an upgrade to its Data Portal, X-Data Portal; Issuers’ Platform, X-Issuer; and its whistleblowing portal, X-Whistle.
The upgrade of the X-DataPortal is in line with the desire of the NSE to continue to provide an exchange that is easily accessible leveraging digital technology. Speaking in an interview, the Chief Executive Officer, NSE, Mr. Oscar N. Onyema, OON stated, “The enhanced X-DataPortal has been equipped with market-focused features that will complement the NSE website and other NSE portals in response to stakeholders’ increased demand for easy access to data. Given the importance of Market Data in investment decisions, we remain resolute in our commitment to provide capital market participants with more channels to access relevant market information required for making investment decisions.”
On the back of the critical role information plays in driving a vibrant capital market, the Exchange introduced its revamped X-Issuer to the market with new features that will enable easy, convenient and more reliable submission and dissemination of company information, corporate actions, directors’ and insiders’ share dealing information, financial statements, earnings forecasts, meeting notices, and much more. It is expected that the upgraded X-Issuer will further enhance the experience of issuers and expedite the discharge of post-listings obligations in a cost-effective and efficient manner.
Of course, the importance of investor protection cannot be emphasized. Speaking on the introduction of the upgraded X-Whistle, the Executive Director, Regulation Division, NSE, Ms. Tinuade Awe, stated, “The Exchange is pleased to introduce the upgraded X-Whistle to the market with robust features that will allow people with information about misconduct to come forward to report it and to provide all stakeholders with the means of expressing their concerns in a responsible and effective manner. In 2019 alone, the complaints, tips and referrals received have led to investors’ restitution in excess of N1.4 Billion. The X-Whistle will, therefore, further equip The Exchange with the tools required to properly assess reports, carry out the necessary investigations and resolve issues efficiently.”
As an Exchange, the NSE leveraged its thought leadership and goodwill to influence decisions aimed at ensuring continuity for the business community amidst the COVID-19 pandemic. Key stakeholders engaged include the Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), Ministry of Finance and Ministry of Trade and Investment.
These advocacy engagements yielded significant outcomes including extension of time for Issuers to file Audited Financial Statements for the year ended 31 December 2019 and extension of time for Dealing Member Firms to submit their Audited Financial Statements for the year ended December 2019 and Quarterly Reports for Q1:2020. NSE further engaged the Institute of Chartered Accountants of Nigeria (ICAN) on the exclusion of the ICAN stamp and seal in audited financial statements.
On its part, The Exchange issued a Guidance Document on Companies’ Virtual Board, Committee, and Management Meetings to the market on 15 April 2020 as part of its ‘Guidance and Leadership Thought’ series. The Exchange noted the legal and regulatory uncertainties that Nigerian businesses may face regarding convening virtual meetings, particularly in the wake of current economic and social constraints precipitated by COVID-19, which underscore the need for companies to adopt a more practical style of holding meetings. The objective of the document was simply to provide non-binding guidance to the Market and other stakeholders on carrying out successful, productive, and rewarding virtual meetings. This was also done to ensure investors are not denied corporate actions due to them, in light of the pandemic.
Masks For All Nigerians
The NSE’s efforts in 2020 also included the fight against COVID-19 in Nigeria with a total of N100 million. Out of this sum, the Exchange redeemed its pledge of N60 million to the Capital Market Support Committee for COVID-19 (CMSCC) with the donation of ambulance and Twenty-Seven Million, Five Hundred Thousand Naira cash. The CMSCC is a Securities and Exchange Commission (SEC) led committee set up to galvanize the capital market ecosystem to play an active role in curbing the spread of COVID-19 in Nigeria.
The balance N40 million was devoted to the “Masks For All Nigerians” campaign with the aim to galvanize responsible corporate citizens and individuals to donate face masks to Nigerians, especially low-income households. The NSE kicked off the campaign with an anchor donation of 110,000 face masks distributed in areas where it has operations and areas that are greatly affected by COVID-19.
Also part of the Masks For All Nigerians campaign was an Employee Giveback Programme tagged 500 Shades of Kindness which led to the donation of over 3,000 face masks to schools, transport workers and communities around NSE. In addition, The Exchange received support from 13 companies bringing the total number of masks donated under this campaign to 609,490 masks.
The Exchange has also successfully transitioned many of its physical engagements to digital events. This include its flagship Closing Gong Ceremony which first went digital via Instagram Live on Thursday, 16 April 2020 with the Managing Director, Sterling Bank Plc, Abubakar Suleiman as the special guest. Since then, The Exchange has commemorated new listings, outgoing and incoming members of Management teams, international celebrations, and more with its virtual Closing Gong ceremony.
Another notable virtual engagement at the NSE in 2020 was the special webinar hosted on Wednesday, 10 June 2020 to highlight the impact of COVID-19 on the global capital market and the resilience of securities exchanges in supporting economies. The webinar themed, “Capital Markets in a Pandemic”, featured a panel session headlined by the Chief Executive Officer (CEO) of NSE, Oscar N. Onyema, OON; CEO, Luxembourg Stock Exchange (LuxSE), Robert Scharfe; CEO, London Stock Exchange (LSE), Nikhil Rathi; and CEO, World Federation of Exchanges (WFE), Nandini Sukumar, and moderated by notable Correspondent of Cable Network News (CNN), Eleni Giokos.
Public and private sector industry leaders also leveraged the platform of The Exchange to highlight the significant benefits of privatisation of State-Owned Enterprises and the impact on economic growth and development. This webinar was hosted by the NSE in collaboration with the Nigeria Governors’ Forum (NGF) and the Nigerian Investment Promotion Commission (NIPC) on Tuesday, 17 November 2020 was themed, “Privatisation in Nigeria and the Outlook for Subnational Economic Development.”
In line with its commitment to continuously enhance the knowledge of capital market players across available asset classes, The Exchange also hosted a series of trainings, workshops and capacity building webinars. These covered fixed income, derivatives, ETFs, stock trading and a lot more also leveraging its learning platform, X-Academy.
While the pandemic has incredibly altered how a lot of organisations work, The Exchange has continued to make progress on many of its strategic plans. For instance, investors in the global capital markets can expect the launch of West Africa’s first Exchange Traded Derivatives (ETDs) on the NSE in the near term following the registration of NG Clearing by the Securities and Exchange Commission (SEC) as a premier Central Counterparty Clearing House (CCP). The approval-in-principle will allow The Exchange to launch ETDs supported by NG Clearing in the risk management process.
To further stimulate market activity, the Exchange migrated four companies – Chellarams Plc, Living Trust Mortgage Plc, McNichols Plc, and The Initiates Plc – from the Alternative Securities Market (ASeM) to the Growth Board and launched the associated Growth Board Index on Monday, 30 November 2020. It would be recalled that the NSE Growth Board was launched on 29 January 2020 to encourage Start Ups, Small and Medium Enterprises and the companies in the Fintech industry with high growth potential to seize the opportunity of raising long-term capital and promote liquidity in the trading of their shares.
Furthermore, the planned demutualisation of The Exchange is now in its final stages of completion. The Exchange has demonstrated its commitment to seeing to the completion of the demutualisation in its efforts to develop a more agile Exchange that is better able to support the economic growth of Nigeria. Post-demutualisation, the expectation is that the NSE will be better equipped to diversify our operations and evolve into a more competitive, robust and liberalised stock market.