No fewer than 49 investors/claimants in Nigeria who suffered pecuniary losses in 2020 got total compensation of N17.02 million from Investors’ Protection Fund (IPF), said Oscar Onyema, CEO, Nigerian Stock Exchange (NSE).
The purpose of the Investors’ Protection Fund is to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from: insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade point; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm in its course of business as a capital market operator.
During the annual 2020 Market Recap and 2021 Outlook, the NSE CEO said the Exchange also facilitated restitution and recoveries of shares worth N305.11 million for investors in 2020.
The NSE Broker TraX shows dealing member firms/individuals involved in unauthorized sale of investors’ shares and misappropriation of investors’ funds between January 2012 and January 18, 2021. Complaints against fifteen (15) firms were resolved by restitution through the Investors’ Protection Fund (IPF).
For the second consecutive year, Nigeria’s equity market transactions were dominated by domestic investors who accounted for 65.28percent of market turnover by value (Retail: 44.98percent; Institutional: 55.02percent) while foreign portfolio investors accounted for 34.72percent.
At the close of the year 2020, the NSE’s equity market capitalisation was up by 62.42percent, from N12.97 trillion in 2019 to N21.06 trillion in 2020 while market turnover saw an uptick of 7.25percent, from N960billion in 2019 to N1.03trillio in 2020.
Although Initial Public Offering activity was mute, the value of supplementary issues increased dramatically from 2019, rising by 851.37percent to N1.42 trillion, from N148.77 billion.
The Nigerian equities market got off to a strong start in 2020, returning 10.4percent by the eighth trading session. By October, the equities market entered a much-awaited bull run. Buoyed by the formal declaration of the U.S president-elect, unattractive fixed income yields, and better-than-expected corporate earnings, the NSE ASI recovered from Q1’20, to close the year at 40,270.72 (+50.03percent) and erase losses of -14.90percent recorded in 2019.
During its remarkable year-end run, the ASI gained 6.23percent in a single trading session which triggered a 30-minute halt of trading on all stocks for the first time since the NSE Circuit Breaker was introduced in 2016 to safeguard market integrity in periods of extraordinary volatility.
Capital-raising activities in the fixed income market increased significantly in 2020. The NSE’s bond market capitalization rose by 35.52percent from N12.92 trillion in 2019 to N17.50 trillion.
Continuing the trend in recent years, the Federal Government of Nigeria dominated issuances, raising over N2.36 trillion which comprised ~92percent of total bond issuances. Corporates also leveraged the low yield environment to fund expansion objectives and pursue debt refinancing, raising a total of N192 billion.