African markets

Nigerian Exchange highlights its performance in 2021 and provides outlook for 2022

Nigerian Exchange Limited (NGX or The Exchange) hosted its 2021 Annual Market Recap and 2022 Outlook in conjunction with Renaissance Capital (RenCap) today, 03 February 2022. The virtual event facilitated conversations around The Exchange, Nigeria’s largest capital market and the economy as a whole with presentations from Chief Executive Officer, NGX, Temi Popoola, CFA, and Chief Global Economist/Head of Macro Strategy, RenCap, Charles Robertson ; and a fireside chat with the Director General of the Federation’s Budget Office, Ben Akabueze.

During his presentation at the event, Mr Popoola said, “History was written when the Nigerian Stock Exchange (NSE) completed its demutualization process, following statutory approvals from the Securities and Exchange Commission. and the Corporate Affairs Commission (CAC). With demutualization, NSE became a non-operating holding company, Nigerian Exchange Group Plc. (NGX Group) with three subsidiaries – Nigerian Exchange Limited (NGX), the operating exchange; NGX Regulation Limited (NGX RegCo), the independent regulatory company; and NGX Real Estate Limited (NGX RelCo), the real estate company. During 2021, many of the benefits of this transaction have been realized, making NGX more agile and commercialized in its operations.

The main results highlighted during the presentation are:

2021 was a generally positive year for the NGX index suite as all but three (3) indices ended the year with positive returns. NGX’s flagship index, the NGX All Share Index, returned 6.1% as corporate earnings recovered and investor sentiment improved. Equity capitalization increased by 5.89% or N1.24Tn during the year. The NGX Oil & Gas Index was the best performing index with a return of 52.52% on the back of the recovery in global oil prices and better performance by oil & gas companies. It was closely followed by the NGX Growth Board Index which returned 28.0%.

In the fixed income market, capitalization increased by 12.81%, from Tn 17.50 in 2020 to Tn 19.74 in 2021, mainly thanks to FGN bond issues. The year 2021 saw the groundbreaking listing of BUA Cement’s N115Bn bond, the largest corporate bond. We also saw the N10Bn rating of LFZC Funding SPV, the oldest corporate bond. We have also seen a significant increase in the value of turnover in fixed income securities, with turnover increasing from 1.37 billion naira in 2020 to 3.52 billion naira in 2021. This represents a 158.19% increase in value traded. This improvement could be attributed to investors taking advantage of rising rates in the fixed income market.

NGX has also made significant progress in its efforts to introduce exchange-traded derivatives. We witnessed the official launch of NG Clearing, Nigeria’s first Central Clearing Counter Party (CCP). The Exchange also registered seven (7) contracts with the Securities and Exchange Commission (SEC) prior to the launch of Exchange Traded Derivatives.

Here are some of the groundbreaking achievements of the year:

  • Client experience: In line with The Exchange’s desire to grow and improve the digital experience for our stakeholders, NGX has launched the first edition of the digital-only version of NGX’s 2021 Annual Factbook (X-Factbook) and released a version enhanced from its X-Mobile App.
  • Advertisement: In the equity sector, NGX listed Bricklink Africa, NGX Group and Ronchess Global Resources Plc by listing on The Exchange; while the bond market saw corporate bond issues BUA Cement Plc (N115Bn); Pierre Cardinale (N5Bn); Nova Merchant Bank (N10Bn); Coronation Merchant Bank (N25Bn); etc
  • Securities lending: NGX increased the total value of securities borrowed/lent in 2021 to 513.10 million naira from 95.18 million naira in 2020 and 340,000 naira in 2019.
  • Market creation: Received approval of amendments to NGX Market Making Rules and relaunched the NGX Market Making Program across the various listed asset classes.

By maintaining its main sustainability pillars, NGX has recorded the following achievements:

  • Gender Gap Assessment Report: NGX, in collaboration with IFC, has launched the first Gender Gap Assessment Report which highlights gender gaps in the Nigerian private sector through a study of the 30 most capitalized companies on NGX.
  • Peer learning platform: NGX, in collaboration with IFC, has launched a 2-year peer learning platform to support listed companies in their quest to improve gender performance in leadership, employment and entrepreneurship Friday, August 6, 2021.
  • Participation in the SSEI working group on climate reporting: NGX participated in the Sustainable Stock Exchanges Initiative (SSEI) working group led by Mark Carney, UN Special Envoy for Climate Action and Finance, to develop a climate reporting guidance template for stock exchanges. The Model Guidance was launched in July 2021.
  • International Women’s Day: NGX has collaborated with International Finance Corporation (IFC), United Nations Global Compact Network Nigeria (GCNN) and UN Women to commemorate International Women’s Day (IWD) 2021 and the 7th ring for gender equality.

Looking ahead, Mr. Popoola highlighted five major areas that NGX will seek to make significant progress in 2022 as follows: leveraging digital transformation, listings and delistings, technology, partnerships and sustainability.