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8/13/2019 Standard Chartered NSE Giant Strides to 1Tr 2013-10-08 Final
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Presented by
Oscar N. Onyema
CEOfor
STANDARD CHARTERED BANKS CAPITAL MARKET FORUMLagos, Nigeria
October 8, 2013
GIANT STRIDES:
Journey to $1 Trillion Market Capitalization
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2
Agenda
1
Nigerian Capital Market Milestones2
African Opportunity: Nigeria
3 Nigerian Capital Market Performance
4 Capital Market Ecosystem
5
Capital Market Growth Risks6
Targeting $1TRN, NSE Key Initiatives
7 Conclusion
The Nigerian Stock Exchange08-Oct-2013
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08-Oct-2013 The Nigerian Stock Exchange 3
The African Opportunity: Nigerias Profile
Total GDP: USD243.98 billion (2012)
Real GDP Growth (%): 6.18% (Q2 13)
Inflation (%): 8.2% (Aug 13)
External Reserves: US$45.7 billion (26 Sep 13)
External Debt: US$6.920 billion (Jun 13)
Total Population: 174.5bn (Jul 13 est.)
Main stock markets: NSE (Sep 13)
N17.72tr (US$114.16bn) Total market cap
N11.66tr (US$75.08bn) Equities market cap
Resources: Oil & Gas (2ndlargest oil reserves in Africa;
10thlargest in the world)
Mining: coal, minerals, precious metals
Commodities: agriculture, timber, rubber
Industries:
Leather, textiles, cement, fertilizer
Best Performing Sectors: (Q2 13)
Agriculture (40.1% of GDP)
Wholesale & Retail Trade (17.3%)
Crude, Petroleum & Natural Gas (12.9%)
Telecommunications (8.4%)
Others (6.7%)
IVORYCOAST
Kenya
ETHIOPIA
ERITREA
SUDAN
EGYPT
NIGER
MAURITANIA
MALI
NIGERIASOMALIA
NAMIBIA
LIBYA
CHAD
SOUTH AFRICA
TANZANIA
DEM REPCONGO
Angola
ALGERIA
MOZAMBIQUE
BOTSWANA
ZAMBIA
GABON
CENTRAL AFRICANREPUBLIC
TUNISIA
MOROCCO
UGANDA
SWAZILAND
LESOTHO
MALAWI
RWANDA
BURUNDI
TOGO
BENIN
Ghana
LIBERIA
SIERRA LEONE
GUINEA
BURKINA FASOGAMBIA
CAMEROON
SO TOME & PRINCIPE
ZIMBABWE
REPUBLIC OFCONGOEQUATORIAL GUINEA
WESTERNSAHARA
DJIBOUTI
SENEGAL
GUINEA-BISSAU
COMOROS
CAPE VERDE
MAURITIUS
MADAGASCAR
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1961
Trading began with 19 listed
securities - 3 equities, 6 Govtbonds and 10 corporate
bonds
Milestones in the Nigerian Capital Market
Since its inception, the NSE has assisted
corporations with raising capital through
the issuance of equity and fixed-incomeproducts
The NSE has provided a platform for the
FGN, individual States and Local
Governments, and other government
entities to raise funds for various types of
projects through the issuance of debt
The NSE is positioning to become the
Gateway to African Markets
To achieve this, the Exchange has
embarked upon a transformation
program to compete effectively in theglobal marketplace, while meeting the
changing needs of our clients, and
facilitating the mid- to long-term
financing needs of the nation
1960
The Nigerian Stock Exchange
(NSE) was founded as theLagos Stock Exchange
1970s
The Lagos Stock Exchange
becomes the NSE and several
branches (with trading floors)
are opened across Nigeria
1980s
Focus on increasing corporate
governance in the market, on
the back of international
exposure via Reuters
1990sThe IPF is operational; policy
is enacted to encourage
foreign participation; and the
Exchange automates trading
2000sModernization, strong GDP
growth, an influx of local/
foreign participation ignite
the market; weak regulatory
practices rupture the market
The Nigerian Stock Exchange 408-Oct-2013
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The Nigerian Stock Exchange 5
An Attractive Investment Destination
3rdLargest Exchange in Africa by Market Cap*
Approx. 5 million investors:*Local YTD49.1% of market activity
Foreign YTD50.9% of market activity
Avg. daily value traded YTD (N4.42b, $28.49m)
Avg. daily volume traded YTD (450.50m)
234 Active dealing member firms
48 Dealing members/Issuing houses
20 Ordinary members/Issuing houses
Equities and products:Total Market Capitalization (N17.72t, $114.16b)
196 listed equities (N11.66t, $75.08b) and
189 operating companies;
57 bonds(N5.98t, $9.07b)
1 ETF (N311.40m, $2.01m)
Founded in 1960
14 electronic trading floors around Nigeria
Data/figures as at the end of Aug 2013
Figures as at September 30, 2013
The Nigerian Stock Exchange
08-Oct-2013
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ASI Index Value
Value Traded (N) Turnover Velocity (Annualized)Equities (%)
Market Capitalization (N)
The Nigerian Stock Exchange 608-Oct-2013
9.5
15.42
5.57
0
4
8
12
16
20
Q1 2013 Q2 2013 Q3 2013Monthly total value traded (turnover) divided by Month-end equities
market capitalization) x 12 expressed as a percentage (WFE)
16.4117.44 17.72
0
5
10
15
20
Q1 2013 Q2 2013 Q3 2013
33,536.25
36,164.3136,585.08
31,000
32,000
33,000
34,000
35,000
36,000
37,000
Q1 2013 Q2 2013 Q3 2013
255,034
336,653
196,832
0
100,000
200,000
300,000
400,000
Q1 2013 Q2 2012 Q3 2012
Millions
NSE Baseline Market Statistics (YTD)
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56.72%
28.80%
22.61%
13.78% 12.63%10.54%
12.71%
5.39%
0.84%
-2.21%
-6.06%-8.18%
-13.06%
-19.66%-22.14%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Ghana
Comp.
Nigeria ASI Nairobi SE DJIA S&P 500 SEMDEX NASDAQ
Composite
FTSE 100 FTSE/JSE FTSE AIM MASI Hang Seng WIG 20 EGX 100 IBovespa
Global Exchange Metrics Indices
Strong Global Performance (H1 13)
7
H1 13 performance shows the DJIA performing at 13.78%reflecting the impact of the USs QE stimulus
Although QE is driving performance of US capital markets, the
Nigerian market is being driven more and more by local investors
as stated previously
As QE is phased out, global investors may seek to cover positions
in their respective local markets which may impact Nigeria in
terms of foreign investors looking to sell down
Performance in the Euro zone as reflected in the FTSE AIM is still
sluggish as a result of the lingering debt crisis Globally, Nigeria remains one of the most attractive markets
The Nigerian Stock Exchange08-Oct-2013
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The Nigerian Stock Exchange 8
Nigerian Capital Market Ecosystem Key Players
NSE (SRO) Only operating exchange for
listing companies
SEC (Apex Regulator) Maintains primary oversight of
the capital market
Investors/Participants Originate orders
Registrars Maintain registers of company
shareholders
Broker-Dealers Bring issuers to the market;
execute buy/sell orders
Custodians Maintain assets on behalf of
investors
Trustees Maintain assets on behalf of
investors
CSCS Sole provider of clearing and
settlement services
08-Oct-2013
Others Issuing houses, OTC platforms,
fund managers etc.
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Click to edit Master title style|The Nigerian Capital Market Today
Exchange-driven reforms have
strengthened the market, e.g., regulatory
oversight is stronger, the market is moreefficient, and investors can count on a
higher level of protection
The Exchange is focused on establishing
technology competitiveness, and is
advocating policy changes necessary to
enable the Nigerian capital market absorbthe forces of change
The Exchange is facilitating the creation
of African Business Champions of
tomorrow
The Nigerian Stock Exchange 908-Oct-2013
2010s
Reforms take hold in the
Nigerian capital market:growth-enabling market
structure; stronger regulatory
environment; targeted
business development
efforts; 21stcentury
technologies; first-rate
investor protection programs;
market development and
improved operational
efficiency
$1 Trillion
Market Cap
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08-Oct-2013 The Nigerian Stock Exchange 10
NSE Key Initiatives
Term
2011 2012 2013 2014
NSEKeyInitiative
s
WithinNSE
Control
- Market Segmentation
- Company Share Buy-Back
- Introduction of ETFs
- Investor Clinics
- New Web Site
- Revised Listing Rules
- Market Making (approved)
- Securities Lending (approved)
- Short Selling (approved)
- Enhancement of Regulatory Programs
- Financial Literacy Program
- IFRS Compliance
- Market Data Services
- Advocacy
On-going
- Develop Product Liquidity and Depth
- Attract and Retain More Listings
- ASeM Re-Launch
- X-Issuer Portal
- CSR Program
- Delivery of X-Gen
On-going
- Product Innovation (e.g. ETFs, NDRs)
- Coop with Other Exchanges & Global
Orgs
- Policy Advocacy
- Demutualization
- Derivatives Feasibility Study
- Transaction Cost Analysis
- Enhanced Rulebook
- Whistle Blowing Program
- Market Optimization
- Operation of Investor Protection Fund
- Automation of Transaction Lifecycle
OutsideNSE
Control
- AMCON Debt Resolution
- Advocacy
- Review PFA Investment Guidelines
- Tax Breaks on Transaction Fees
- Exit Strategy for Privatized Entities
- Broker Margin Debt Resolution
- Broker Access to Funding
- Policy on Large Cap Firms
- Access to SWF Funds
- Reduce Focus on Dividends
- Capacity of Local Institutional Investors
(on-going)
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Clear delineation and segregation of
responsibilities between capital market
operators
Robust regulation and risk based supervision
Greater enforcement of laws, rules and
policies
Cultivation of strong and extensive network of
domestic talent
Greater array of products and services
Good corporate governance
Quality new listings
Imbalance between supply and demand,
and oversubscription of quality listed
companies
Inadequate talent pool in the region to
support rapid growth
Effective information dissemination
Sufficient legal due process and protection
Sufficient due diligence by market players
Relatively few listed companies when
compared to regions like China and India
Low liquidity Government policy
11
Capital Market Growth Risks
Risks Risk Mitigation Measures
The Nigerian Stock Exchange08-Oct-2013
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12
Conclusion
The Exchange will continue work to:
innovate on technology and product development
achieve efficiency and liquidity
advocate growth enabling policy positions
restore investor confidence, as we improve our regulatory soundness
adapt to meet the shifting needs of its clients
achieve competitiveness as a focal point of its agenda
achieve its goal of transforming the Nigerian capital market
We are on course to delivering service excellence, and positioning ourselves as the undisputed
gateway to African markets.
The Nigerian Stock Exchange08-Oct-2013
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Thank You
Stock Exchange House
2 - 4 Customs StreetP.O. Box 2457, Marina
Lagos Island, Lagos, Nigeria
oonyema@nse.com.ng
THANK YOU
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