The Federal Government has dominated fixed income market performance at the Nigerian Stock Exchange (NSE) in 2018 with capital raising of N1.16 per cent, representing 79.30 per cent of bond issuance in the year.
Delivering his presentation at the NSE’s 2018 Market Recap and Outlook for 2019 on Monday at the Stock Exchange House, Lagos. The Chief Executive Officer of NSE, Mr Oscar Onyema, said that fixed income market capitalization increased by 11.75 per cent to N10.17tn from N9.10tn in 2017 while noting that capital raising was dominated by the Federal Government who borrowed N1.16 trillion in a bid to finance fiscal and infrastructure deficits.
He added that State Governments raised N125.59 billion in new debt capital, while corporates raised a total of N31.47 billion, just as the market also witnessed the listing of a N100 billion FGN Ijarah Sukuk designed to finance critical road infrastructure across the country.
Reviewing the performance of the market in 2018 to stockbroking community, analysts, media and other stakeholders, Onyema noted that NSE equity market started the year on a high, with the All Share Index (ASI) reaching a ten-year peak of 45,092.83 in January.
“This was largely driven by the positive performance of the ASI in 2017 which emerged the best in Africa. As we approached the second quarter, political risks, oil price volatility and rising global yields resulted in bearish sentiments that saw the ASI and equity market capitalization fall by 17.81per cent and 13.87 per cent to close at 31,430.50 and N11.73 trillion respectively”.
He explained that while listing activity remained relatively low during the year, (one listing and four delistings), equity turnover remained relatively stable, marginally declining by 5.45 per cent to N1.20 trillion. Turnover velocity inched up 0.91 percentage points to 10.25 per cent, and likewise, the size of volumes traded in the period increased by 0.96 per cent to 101.43 billion with the Financial Services sector being responsible for the highest traded volume and value. In the year under review, foreign portfolio investments outpaced domestic participation by 1.73 per cent, accounting for 50.87 per cent of total transactions, while domestic transactions accounted for 49.13 per cent.
Within Domestic Institutional order flow was 56 per cent while retail order flow was 44 per cent.
Speaking on the outlook for 2019, Onyema noted that the market sentiments in the first half of the year will be driven by uncertainty in oil prices as well as the 2019 general elections. “Accordingly, we anticipate volatility in equities markets first half of 2019, with enhanced stability post-elections. We believe the swift approval and implementation of the 2019 budget will have a positive impact on companies’ earnings as well as consumer spending. Therefore, we expect an uptick in market activity during the second half of 2019”.
“To enhance our listing prospects, we have strengthened our government engagement efforts on privatization and listing of state-owned enterprises, and we expect to take advantage of opportunities within this space during the year. We also intend to maintain our collaborative efforts with public and private sector stakeholders to advocate for market-friendly policies, and cater to infrastructure financing needs as well as other capital requirements necessary for sustainable economic growth. The Exchange intends to work with the private sector as well, to catalyse the listing of more companies”
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