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NGX eyes more listings to meet 2023 strategic goals

NGX Group makes strategic investment in Ethiopian Securities Exchange

After weathering the global market downturns to make a strong showing in 2022 with landmark listings, the Nigerian Exchange Limited (NGX) said it will 2023 be using listings as a vehicle for meeting strategic aspirations.

Speaking at the NGX 2022 Market Recap and 2023 Outlook held on Wednesday, Temi Popoola, Chief Executive Officer, Nigerian Exchange Limited said the NGX would take a flexible approach to strategy execution in 2023, “doubling down on its 2022 achievements and expanding on several levers.”

He said: “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”.

“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,” Popoola said.

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

In 2022, the equities market performance was evidenced by the 19.98percent increase in the NGX All-Share Index, which rose from 40,270.72 points to 51,251.06 point just as the market capitalisation also closed at a high of N27.92trillion, up from N21.06trillion the previous year.

The total turnover of trades in 2022 improved by 27percent from N916billion to N1.16trillion 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 N3.53billion recorded in 2021. This represents a 10.20percent year-on-year (YoY) increase.

Earlier in his presentation, Simon Kitchen, managing director- head of strategy, EFG Hermes Research noted that there is a valuation opportunity in Nigeria market but not a big one. He also noted among others that the local pension fund positioning in the market is still very small.

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.

Read also: Parthian Securities sees domestic investors driving equities market growth in 2023

“The Exchange Traded Funds (ETF) market capitalisation increased from N7.35billion in 2021 to N8.42billion in 2022, representing a 14.56percent 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 begun the year at N68.5 and closed at N245, reflective of 257.66percent returns. ETF transactions fell from N34.22billion in 2021 to N211.02million in 2022.

“This represents a 99.38percent decline in ETF turnover. Altogether, this signalled a good year for the Exchange despite global macroeconomic headwinds,” Popoola added.

The year 2022 performance was attributed in part to the N4.3trillion in listings recorded by NGX across Equities and Fixed Income markets. These listings included the raising of N2.54trillion of bond listings for the Federal Government of Nigeria, as well as equity listings totalling N1.35trillion 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 N364.78billion raised through listed instruments such as Dangote Industries Plc’s N177.12billion senior unsecured bonds, Lagos Free Zone Company SPV Plc’s N25billion fixed rate infrastructure bonds and Ardova Plc’s N11.44billion and N13.86billion fixed rate senior unsecured bonds. NGX also listed FGN Multi-Tranche $4billion 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.

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.

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.

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.