NGX weathers global market downturns in 2022, makes strong showing with landmark listings

     2023 likely to be dawn of new day for market, Nigerian economy, says Popoola

Nigerian Exchange Limited (NGX) made a strong showing with its performance in the year 2022 as it recorded landmark transactions.

At the NGX 2022 Market Recap and 2023 Outlook held on Wednesday, 25 January 2023, the Chief Executive Officer, NGX, Mr Temi Popoola said, “In 2022, the equities market performance was evidenced by the 19.98% increase in the NGX All-Share Index, which rose from 40270.72 to 51,251.06 just as the market capitalisation also closed at a high of N27.92tn, up from N21.06tn the previous year. The total turnover of trades in 2022 improved by 27% from N916bn to N1.16tn year-on-year from 2021. Market participation was heavily skewed to the domestic investors. The Fixed Income market saw a slight uptick in turnover to N3.89bn in 2022 from N3.53bn recorded in 2021. This represents a 10.20% YoY increase.

“The Exchange Traded Funds market capitalisation increased from N7.35Bn in 2021 to N8.42Bn in 2022, representing a 14.56% increase in the market capitalisation. Stanbic IBTC ETF 30 which tracks the performance of NGX 30 index was the best performing ETF in 2022, having began the year at N68.5 and closed at N245, reflective of 257.66% returns. ETF transactions fell from N34.22bn in 2021 to N211.02m in 2022. This represents a 99.38% decline in ETF turnover”.

“Altogether, this signalled a good year for the Exchange despite global macroeconomic headwinds,” Popoola added.

Landmark Listings

The yearly performance can be attributed in part to the N4.3trn in listings recorded by NGX across Equities and Fixed Income markets. These listings included the raising of N2.54trn of bond listings for the Federal Government of Nigeria, as well as equity listings totalling N1.35trn from companies such as BUA Foods Plc and Geregu Power Plc.

Corporate bond listings also contributed significantly to the Exchange’s performance, with a total of N364.78bn raised through listed instruments such as Dangote Industries Plc’s N177.12bn senior unsecured bonds, Lagos Free Zone Company SPV Plc’s N25bn fixed rate infrastructure bonds and Ardova Plc’s N11.44bn and N13.86bn fixed rate senior unsecured bonds. NGX also listed FGN Multi-Tranche $4bn Eurobonds which further demonstrated its diversity of offerings and its ability to attract a wide range of businesses looking to raise capital.

The value of these listings displays NGX’s commitment to positioning itself as a premier location for capital raising and formation, as well as its ongoing development efforts in the Nigerian capital market post its demutualisation. The Exchange’s ability to facilitate a wide range of transactions and attract a diverse range of businesses highlights its position as a leader in financial market innovation and progress on the African continent.

Partnerships

NGX partnered with MTN Nigeria to further enhance retail participation in the country’s capital market. NGX also forged strategic partnerships by signing Memoranda of Understanding with the Bank of Industry and Dubai Financial Market to deepen the capital market and build capacity for inclusive growth. These spotlighted the Exchange’s commitment to supporting the development of the Nigerian capital market and fostering growth and prosperity in the country.

Sustainability Drive

NGX demonstrated its commitment to sustainability in 2022 through a number of initiatives and collaborations. In an effort to further catalyse Nigeria’s path towards reducing greenhouse emissions and aligning with the objectives of the Paris Agreement, NGX collaborated with the International Finance Corporation (IFC) on a Green, Social and Sustainability Bonds workshop for capital market stakeholders.

NGX, through its specialised knowledge platform, X-Academy, collaborated with NGX Regulation Limited (NGX RegCo) and Global Reporting Initiative (GRI) on a capacity building session focused on sustainability reporting and Environmental, Social, and Governance (ESG) disclosures for listed corporates.

The Exchange joined over 100 securities exchanges around the world in celebrating International Women’s Day and Ringing the Bell for Gender Equality. The event, hosted in collaboration with International Finance Corporation (IFC), Sustainable Stock Exchanges (SSE) Initiative, United Nations (UN) Women, United Nations Global Compact (UNGC), and World Federation of Exchanges (WFE), brought stakeholders together to explore the key issues that could facilitate progress towards gender equality through policy and finance.

NGX continues to progress in its EDGE certification process with the support of IFC under the Nigeria2Equal Programme. This certification recognises organisations that are committed to gender equality in the workplace, and NGX’s participation demonstrates its dedication to promoting sustainable and inclusive practices.

Product Development and Innovation

April 2022 was a particularly significant month, with the launch of West Africa’s first Exchange Traded Derivatives market on NGX. This innovative development expands the exchange’s offerings and cements its position as a leader in the African financial market.

The approval of the NGX Technology Board Listing Rules by the Securities and Exchange Commission (SEC) and the hosting of the Made of Africa Awards, which recognised and rewarded innovation and compliance were the highlights in December. The approval of the listing rules further demonstrates NGX’s commitment to providing a reliable and efficient platform for capital raising and positions the Exchange as an attractive destination for capital formation by companies within the Technology sector. The Made of Africa Awards highlighted the Exchange’s dedication to fostering innovation and spurring compliance to best practices in the capital market.

NGX’s strategic partnership with other exchanges in Africa under African Securities Exchanges Association yielded fruits with the launch of the African Exchanges Linkage Project, (AELP) which is aimed at boosting trade and capital flows between African capital markets. The CEO, NGX, Temi Popoola was also elected to the executive committee of the African Securities Exchanges Association.

The year was brought to a close with a high note as popular filmmaker Kemi Adetiba closed the market, with NGX soaring by 19.98%. This strong finish to the year was a testament to NGX’s continued success and growth in the Nigerian capital market.

Overall, the data and events of 2022 demonstrate the Exchange’s focus on providing a reliable and efficient platform for capital raising and formation, as well as its ongoing product and services expansion in the Nigerian capital market. Its dedication to fostering sustainable development in the African economy positions it as a driving force for innovation and progress on the continent.

2023 Outlook

According to Popoola, NGX would take a flexible approach to strategy execution in 2023, doubling down on its 2022 achievements and expanding on several levers. “As you know, the NGX Technology Board Listing Rules were approval by the apex regulator, the Securities and Exchange Commission in December 2022. With this, we aim to drive more technology companies to the Exchange and deepen capital formation in the technology sector. Currently we are in consultations with stakeholders in the sector and we are confident of securing a few big names within the year,” the CEO added while speaking at the event.

“On strategic partnerships, we will be forging more with development finance institutions, banks, both local and international to further develop the market. We aim to do more on trading where we improve data dissemination to attract a larger investor base, especially from the retail side. We will be using listings as a vehicle for meeting strategic aspirations as the new dispensation comes in through increased advocacy and engagements.

“NGX sees sustainability as not just important but also a profitable frontier of its business and work is ongoing on developing a framework for certifications in carbon credits trading, pending regulatory approval. On the capital market’s digital transformation, the Exchange is working on USSD launch in collaboration with Telcos and Banks; unlocking the African Capital markets via payment integration with Afreximbank’s Pan African Payment Settlement System.” The Exchange also sets its sight on the development of new products aimed at attracting the lower rung of the Nigerian demography, says Popoola. “NGX is also focused on increasing youth participation with the creation of digital asset products powered by Blockchain technology, non-depository receipts and overall increasing the pool of available liquidity in the market. Altogether, 2023 is likely to be a new dawn for the market and the Nigerian economy as significant events take shape in the macroeconomic and political environments