2013 MARKET OUTLOOK - Nigerian Stock Exchange 2012 Market... · Click to edit Master title style...

Click to edit Master title style

Presented by

Oscar N. Onyema

CEO

January 17, 2013

2013 MARKET OUTLOOK

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• Summary

• 2012 Market Review Macro Economic Performance

Capital Market Snapshot

2012 Achievements

• 2013 Outlook Projections

2013 Key Objectives

• Conclusion

• Q&A

The Nigerian Stock Exchange 2

Outline

Rev 4/23/2013


Rev 4/23/2013 The Nigerian Stock Exchange 3

Summary

• The Nigerian Stock Exchange (NSE) was one of the top performing exchanges globally in 2012.

• The NSE All Share Index (ASI) grew 35.45%, and average daily turnover for equities was N2.65 billion($17.07 million), up 4.74%.

• The capitalization of listed equities grew 37.36% from N6.54 ($41.87 billion) to N8.98 trillion ($57.83billion).

• The year closed with two (2) new equity listings on the Main Board and 10 new bond listings.

• In 2012, the NSE executed a number of key strategic initiatives, among which were Primary MarketMaking, a suite of value-added services (X-value), and investments in two alternative tradingplatforms.

• The outlook for 2013 is largely positive for both the Nigerian economy and the Nigerian capital marketas changes implemented in 2012 begin to crystallize in 2013.

• By the end of 2013, the NSE expects to be well-positioned to adapt our business to meet the needs ofour clients, and to enable the Nigerian capital market absorb the forces of change reshaping globalfinancial markets and the global exchange landscape.


Rev 4/23/2013

Nigeria in 2012

4The Nigerian Stock Exchange

Highlights

• Government policy on fuel subsidy in January 2012 stalled economic activities in the first quarter

• GDP growth - 6.48% (Q3 2012)

• Double-digit inflation - 12.3% (Nov 2012)

• Double-digit lending rates - MPR of 12% (Nov 2012)

• The economy decreased it’s dependency on Oil and Gas as a percentage of GDP (13.42% contribution in Q3 from 15.80% in Q1)

• Agriculture’s contribution to GDP increased from 34.47% in Q1 to 42.62% in Q3

• Nigerian government bonds included in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM)

Click to edit Master title style|NSE INDEX PERFORMANCE

Nigerian Industry Sector Performance


-30.53%

-17.45%

23.84%

35.45%

42.29%

44.21%

44.63%

-50% -30% -10% 10% 30% 50%

Bloomberg NSE Oil/Gas

Bloomberg NSE Insurance

Bloomberg NSE Banking

NSE All Share Index

Bloomberg NSE Consumer Goods

NSE Lotus Islamic

Bloomberg NSE 30



Global Exchange Performance

2012 Key Index Performance

38.72%35.45%

26.61%24.46%

22.71%20.70%

17.72%15.91%

13.41%

7.39% 7.26% 5.84%

0.56%

-8.00%

-14.46%-20%

-10%

0%

10%

20%

30%

40%

50%

Nai

rob

i ASI

Nig

eri

a A

SI

Gh

ana

Co

mp

.

EGX

10

0

FTSE

/JSE

ASI

HA

NG

SEN

G

WIG

20

NA

SDA

Q C

om

p.

S&P

50

0

IBO

VES

PA

DJI

A

FTSE

10

0

FTSE

AIM

SEM

DEX

MA

SI


2011 2012 % Change

Total Market CapitalizationN10.28 trillion

$62.23 billion

N14.80 trillion

$95.32 billion43.97%

Equities Market CapitalizationN6.54 trillion

$41.87 billion

N8.98 trillion

$57.83 billion37.36%

Bonds Market CapitalizationN3.74 trillion

$23.94 billion

N5.82 trillion

$37.48 billion55.61%

NSE All Share Index 20,730.63 28,078.81 35.45%

Bloomberg NSE 30 Index 923.77 1,336.07 44.63%

Bloomberg NSE Consumer Goods 589.60 838.97 42.29%

Bloomberg NSE Banking Index 274.26 339.63 23.84%

Bloomberg NSE Insurance Index 143.54 118.49 -17.45%

Bloomberg NSE Oil/Gas Index 220.11 152.92 -30.53%

NSE Lotus Islamic Index 1,226.74 1,769.07 44.21%

Total Volume - Equities 82.30 billion 89.15 billion 8.32%

Total Value (Turnover) - EquitiesN622.60 billion

$3.99 billion

N657.77 billion

$4.24 billion5.65%

Avg. Daily Volume - Equities 334.54 million 359.50 million 7.46%

Avg. Daily Value (Turnover) - EquitiesN2.53 billion

$16.20 million

N2.65 billion

$17.07 million2.71%

Turnover Ratio - Equities (%) 9.52 7.33 -23.00%

No. of New Issues 11 12

Value of New IssuesN1,810.39 billion

$11.59 billion

N195.36 billion

$1.26 billion


Market Snapshot & FPI

FPI MARKET ACTIVITY

$4,893

$6,643

$2,851

$3,855

$5,511

$4,716

$0

$2,000

$4,000

$6,000

$8,000

2007 2008 2009 2010 2011 2012

Mill

ion

s*All December figures not yet reported.

*



Market Snapshot

EQUITIES

• Number of listed companies at the end of 2012 decreased from 194 to 191.

• Number of listed equities also declined to 198 from 201.

• Zero IPOs , two (2) new listings on the Main Board.• Four (4) companies delisted.• Three (3) banks delisted and relisted in compliance

with the holding company structure mandate by the Central Bank of Nigeria (CBN).

NUMBER OF NEW ISSUES (Bonds and Equities)

11

12

10

11

12

13

2011 2012

No

. of

Issu

es 9.09%

HIGHLIGHTS

• Total market for capitalization for equities and fixed income securities increased 43.97% to N14.80 trillion ($95.32 billion).

• Market capitalization for all listed equities on the Main Board and on the Alternative Securities Market (ASeM) rose by 37.36%. 9.59%

39.70%

43.78%

0% 10% 20% 30% 40% 50%

Small Cap

Large Cap

Mid Cap

Small Cap Large Cap Mid Cap

% GROWTH IN MARKET CAPITALIZATION



Market Capitalization by Segment

MAIN BOARD ASeM

BONDS

24%

70%

6%

CORPORATE BONDS/DEBENTURES

GOVERNMENT BONDS-FEDERAL

GOVERNMENT BONDS-STATE & LOCAL

0% 1% 1%

32%

34%

1%

1%

27%

0%2% 1%

AGRICULTURE

CONGLOMERATES

CONST./REAL EST.

CONSUMER GOODS

FINANCIAL SERVICES

HEALTHCARE

ICT

INDUSTRIAL GOODS

NATURAL RES.

OIL AND GAS

SERVICES

1% 2% 0% 3%0%

37%

57%

CONST./REAL EST.

CONSUMER GOODS

HEALTHCARE

INDUSTRIAL GOODS

NATURAL RES.

OIL AND GAS

SERVICES


622.6

657.77

600

610

620

630

640

650

660

670

2011 2012

NG

N (

=N

= b

rilli

on

) 5.65%

TOTAL TURNOVER (N) - EQUITIES


Market Snapshot (contd.)

15% 17%

31% 36%

67%56%85% 84%

69% 64%

33% 44%

0%

20%

40%

60%

80%

100%

2007 2008 2009 2010 2011 2012

% o

f to

tal v

alu

e tr

aded

Foreign Investors Local Investors

FPI CONTRIBUTION

*All December figures not yet reported.

*

BONDS

• Market capitalization of bonds soared 55.61% to N5.82 trillion ($37.48 billion).

• Seven (7) new State and Corporate bond issues, and three (3) Federal Government bond issues.

• The value of cash transactions for government bonds, fell for the third consecutive year by 11.14%, to N7.10 trillion ($45.73 billion).

• Increased focus on Treasury bills (T-bills) in 2012; cash transactions valued at N13.92 trillion ($89.65 billion), a 28.75% increase over the previous year

TURNOVER HIGHLIGHTS

• Total turnover was N657.77 billion ($4.24 billion).

• Average daily turnover was also up 4.74% compared to -20.71% experienced in 2011.

• Turnover ratio for 2012 was 7.33% down 23.00% from 2011 (9.52%).



The Way Forward

1. Targeted business development efforts

2. Stronger regulatory environment

3. 21st

century technologies

$1 Trillion Market Cap by 2016

4. Growth enabling market structure

The “Five Pillars”

5. First-rate investor protection programmes



Results of Collaboration

15,000

20,000

25,000

30,000

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Ind

ex V

alu

e

In September, the NSE launches its Market Making initiative with 10 stockbroker firms.

The year starts off slow due to the removal of the fuel subsidy.

Market experienced steady growth as Investors start returning to the market.

The market experiences a growth of 10.66% to the end of the year following the implementation of the NSE’s 2012 key initiatives.

10.66%

Click to edit Master title style|NSE PILLARS ACHIEVEMENTS

Targeted Business Development Efforts NSE Lotus Islamic Index

Xvalue Services

Strong Regulatory Environment New Listing Rules

Broker TraX Tool

X-Compliance Report

X-Qual Report

21st Century Technologies Strategies New Web Site

X-Net VPN

X-Gen Development

Market Data

Growth-Enabling Market Structure Equity Primary Market Making

Securities Lending and Short Selling

First-Rate Investor Protection Programs Financial Literacy

Investor Protection Fund Launch

Market Development and Improved Operational Efficiency VAT and Stamp Duty Elimination

Margin Debt Relief

Investments in OTC Trading Platforms


2012 Achievements



2013 Outlook

• Fiscal drag for the US projected in 2013, while European sovereign debt fears ease.

• Concerns over China’s growth begin to ease and stronger growth expected.

• Projected global growth for 2013 is 2.4% (OECD).

GLOBE

• The search for gains by global investors will further place emerging and frontier markets in the path of increased trading activity and growth.

• 2013 projected growth for Africa at 4.8%.

• African nations expected to maintain positive growth trajectory - Ghana 7.7%, Angola 7.1%, Nigeria 6.6%, Kenya 5.5% and South Africa 3.6% (ADB).

AFRICA

• Projected national growth for 2013 of 7.67% (NBS).

• Falling inflation expected as a result of government policy on fuel subsidy, however, CBN restrictive monetary policy expected to help counter effects.

• Positive Government initiatives to continue - increasing power generation, financial inclusion, agricultural transformation, and strengthening fiscal discipline are expected to carry over into the New Year.

NIGERIA


• The Nigerian Capital Market will continue to face challenges around liquidity and depth, but concerted efforts to address the situation are underway.

• Expect growth trend experienced in Q4 2012 to extend into 2013 as investor confidence measures by the NSE mature.

• Anticipate the relative attractiveness of FGN bonds to continue for local and global investors, as a result of record-high yields and new attractive issuance.

• National bonds to remain in the international spotlight due to their upcoming inclusion into Barclay’s Emerging Market Local Currency Bond Index.

• Foreign issuers such as the International Finance Corporation (IFC) are expected to enter the Nigerian bond market.

• Contributing factors to optimism about the capital market include:

– Early passage of the national budget;

– Pronouncement to begin investing proceeds of the Sovereign Wealth Fund (SWF) in March 2013;

– Elimination of VAT and stamp duties, expected to take effect in 2013; and

– Continued product innovation by the Exchange, including the commencement of secondary bond market trading, and introduction of new indices and ETFs.


Nigerian Capital Market and NSE Outlook


NSE PILLARS SHORT-TERM (2013)

1. Targeted Business Development Efforts • ASeM Re-Launch• Derivatives Feasibility Study• Product Innovation (e.g. ETFs, NDRs)

2. Strong Regulatory Environment • Enhanced Rulebook• Issuer’s Portal • Improved Cooperation with Other Exchanges and Global

Organizations• Whistle Blowing Programme

3. 21st Century Technologies Strategies • Delivery of New Trading Platform• Automation of Transaction Lifecycle

4. Growth-Enabling Market Structure • Transaction Cost Analysis • Market Optimization

5. First-Rate Investor Protection Programs • Financial Literacy Programme• Operation of Investor Protection Fund

6. Market Development and Improved Operational Efficiency • Policy Advocacy• Corporate Social Responsibility (CSR) Programme• Demutualization


Key 2013 Initiatives



Conclusion

• The Exchange will continue with innovations centered on technology and product development, as well as on advocating changes to policy.

• By the end of 2013, we will have established our technology competitiveness, restored our regulatory soundness, and advocated the policy changes necessary to enable us absorb the forces of change.

• The Exchange will be well-positioned to adapt our business to meet the shifting needs of its clients.

• Achieving competitiveness will be at the forefront of the Exchange’s agenda.

• The Exchange will work to achieve its goal of transforming the Nigerian capital market and helping to facilitate the emergence of the next group of ‘African Champions’.

• We are on course to delivering service excellence, and positioning ourselves as the undisputed “gateway to African markets”.


Thank You

Questions & Answers


Thank You

Stock Exchange House

2 - 4 Customs Street

P.O. Box 2457, Marina

Lagos Island, Lagos, Nigeria

[email protected]

Thank You

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