The capital market witnessed sustained rally in 2012 following measures put in place by the regulators to facilitate the rebound. Besides the battle between the Securities and Exchange Commission’s Director General, Arunma Oteh, and the National Assembly that continued into the new, all efforts were geared towards ensuring that the Nigerian Stock Exchange, NSE, returned to path of profitability through various initiatives adopted by the NSE management to increase robustness of the market.

Following the public hearing into the near collapse of the market organised by the Senate Committee on Capital Market, which threw up the disharmony in the Commission, the board of SEC and other top functionaries were dismissed. A new board was, however, constituted last month.

The SEC DG was asked to step aside to allow for unfettered investigation into the alleged misappropriation of Project 50 funds. Her recall by the federal government despite recommendation of the joint National Assembly that she should be sacked later culminated to refusal of NASS to pass the budget of the commission.

*Stock exchange floor

Some NSE’ initiatives

Chiefly among the changes that swept through the stock exchange within the year was the reconstitution of the Council members, while the eight men co-opted by the SEC DG were ousted. After a two-year legal battle over the moral implication of his position as the president of council of NSE, Alhaji Aliko Dangote returned as the President.

A Market Segmentation exercise was completed to rebrand the stock market and boards, and align industry sectors under which companies are listed, which brought the sectors down to 12 from 33.

To address market depth, The NSE introduced a series of new products – the SIM Capital Alliance Value Fund, the ABSA NewGold ETF and the NSE-Lotus Islamic Index. They provide investors the opportunity to gain exposure to gold, a concentrated portfolio of value stocks, and to Shari’ah-compliant companies. Within the year, the NSE announced the appointment of ten market makers to conduct market making activities. This was launched concurrently with Securities Lending and Short Selling.

The NSE revised its listing rules and effectively brought down the listing fees, realigned free float for quoted companies and other minimum requirements for new listings in a bid to attract more companies. It also deployed systematic sector- board- product-specific marketing strategies, and introduced value-added services to address specific concerns hindering market growth.

To protect minority shareholders, The Exchange kicked off a financial literacy program to educate investors on portfolio construction and the benefits of diversification. It also launched investors’ protection fund to help cushion the effect of losses suffered by investors to unscrupulous stockbrokers. The NSE took time to flash companies that failed in their post listing requirements to protect investors from putting their money in those companies.

The NSE recently made history as the first capital market operator in Africa to introduce a Market Quality Report -The “NSE X-QuaIReport” which is designed to disclose the extent to which equities traded on The Exchange provide executions at prices better than the prevailing price quotes before an investor places an order among several initiatives.

Following the appointment of Stanbic IBTC Capital as the sole government stockbroker for Federal Government Bonds, the Debt management Office, DMO, announced the commencement of bonds trading on the secondary market.

The issue of margin loan was also settled with extension of N22.6 billion forbearance package to 84 stockbrokers believed to were heavily involved in the margin trading. Besides, waiver of stamp duties and exemption of VAT on transactions on the exchange was also granted by the federal government at the tail end of the year, while those commissions payable to the NSE, SEC and Central Securities Clearing System were removed and included in the list of VAT-exempt goods and services.

Market performance

Though the year started out  on bearish note with NSE All-Share Index (ASI) depreciating by 32.63 points or 0.15 per cent and market capitalisation dropping to N6.533 trillion, but  at the close of trading last week NSE All-Share Index  appreciated by 1.69 per cent to close at 27,866.51, while  Market Capitalization of the listed equities appreciated by 1.73 per cent to close at N8.907 trillion. According to analysts at Proshare, Nigerian equities ended the year 2012 with an impressive year-to-date, YTD, performance of 35.45 percent gain, precisely hitting a  34-months high at 28,078.81 basis points.

The Nigerian market garnered above 7,000 basis points amid weak and mixed daily average turnover recorded in the year; on the back of strong and positive market sentiments on the part of investors. “This was however achieved with a 70 percent foreign participation as at December 2012; a far cry from the 53 percent recorded in 2008 – and a source of concern about the dearth of domestic investor stake in the market recovery push.

New listings

To A total of 12 companies were delisted from the daily official list for non-compliance to post-listing rules. Some of the the companies include Aluminium Manufacturing Company of Nigeria Plc, Capital Oil Plc, W.A. Glass Industry Plc, Union Dicon Salt Plc, Hallmark Paper Products Plc, Nigeria Wire Industry Plc, and Rokana Industry Plc. Others are Lenards Nigeria Plc and Udeofson Garment Factory (Nig) Plc Abplast and Confidence Insurance. Patina Computer System voluntarily delisted.