RECENT DEVELOPMENTS IN THE CAPITAL MARKET

Transcription

1 Click to edit Master title style RECENT DEVELOPMENTS IN THE CAPITAL MARKET Presented by Oscar N. Onyema, CEO for American Business Council Breakfast Session Ikoyi, Lagos April 22, 2013

2 Click Agenda to edit Master title style Background of the NSE 2013 Global Outlook Global Capital Market Performance Nigerian Capital Markets Developments Functions of the NSE Recent Achievements 2013 Initiatives Q&A Thank You 22-April-2013 The Nigerian Stock Exchange 2

3 Click History of edit the Master Nigerian title Stock style Exchange 1960 The Nigerian Stock Exchange (NSE) was founded as the Lagos Stock Exchange 1961 The Exchange started with 19 listed securities made up of 3 equities, 6 federal gov t bonds and 10 industrial loans Since its inception, the NSE has assisted corporations in accessing the Nigerian capital market in order to raise capital via the issuance of equity and fixed income products to retail and institutional investors 1980s During this period efforts were made to increase corporate governance over the Exchange with further rules and regulations by SEC 1970s The name was changed from the Lagos Stock Exchange to the NSE in 1977 and several trading floors were opened across Nigeria Additionally, the NSE has aided state and government entities in the issuance of fixed income products that are tradable on the Exchange The Vision of the Exchange is To be the Gateway to African Markets 1990s The CSCS was incorporated in 1992 and rules & regulations were introduced to allow for foreign investors participation in the market 2000s The market began a robust climb on the back of strong GDP growth and the influx of foreign capital into the country and Exchange In order to achieve its Vision, the Bourse has embarked upon a series of strategic initiatives to increase the dynamics of the Nigerian capital market 22-April-2013 The Nigerian Stock Exchange 3

4 Click 2013 to Global edit Master Outlook title style GLOBE Fiscal drag for the US projected in 2013, while European sovereign debt fears ease. Concerns over China s growth begin to ease and stronger growth expected. Projected global growth for 2013 is 2.4% (OECD). AFRICA NIGERIA The search for gains by global investors will further place emerging and frontier markets in the path of increased trading activity and growth projected growth for Africa at 4.8% - 5%. African nations expected to maintain positive growth trajectory - Ghana 7.7%, Angola 7.1%, Nigeria 6.6%, Kenya 5.5% and South Africa 3.6% (ADB). Projected national growth for 2013 of 7.67% (NBS). Falling inflation expected as a result of government policy on fuel subsidy, however, CBN restrictive monetary policy expected to help counter effects. Positive Government initiatives to continue - increasing power generation, financial inclusion, agricultural transformation, and strengthening fiscal discipline are expected to carry over into the New Year. 22-April-2013 The Nigerian Stock Exchange 4

5 Ghana Composite Nairobi ASI NSE ASI DJIA SEMDEX S&P 500 FTSE 100 NASDAQ Composite MASI FTSE/JSE ASI HANG SENG IBOVESPA WIG20 Click Selected to edit Global Master Exchange title style Performance Index Performance (as at Friday April 19, 2013) 55% 45% 48.21% 35% 25% 15% 5% 25.44% 17.50% 11.01% 9.95% 9.05% 6.59% 6.18% -5% -1.05% -2.11% -2.84% -15% % % 22-April-2013 The Nigerian Stock Exchange 5

6 Click Capital to Market edit Master Ecosystem title style (Enabling Forces) Organization Enabling Framework Function Impact SEC ISA 2007 and SEC Rules (Nov 2012) NSE CSCS Registrars Broker-Dealers Trustees SEC registration as an Exchange; ISA 2007 and SEC Rules (Nov 2012); NSE MEMART; NSE Rules SEC registration as a CSD; ISA 2007 and SEC Rules (Nov 2012) SEC registration as a Registrar; ISA 2007 and SEC Rules (Nov 2012) SEC registration plus NSE license; CIS Act of 1992; ISA 2007, NSE Rules SEC registration as a Trustee; ISA 2007; Trustee Investment Act ; SEC Rules (Nov 2012) APEX regulator and Market Developer Market Operator (SRO) Clearing, Settlement and Depository Maintain register of company shareholders Bringing issuers to the market; executing trades for self and for investors Maintain assets on behalf of investors This is the principal organization that oversees operators and issuers in the Nigerian capital market Central marketplace for the issuance, listing and trading of securities and an integral part of the capital market in Nigeria Sole provider of clearing and settlement infrastructure to the Nigerian capital market (i.e. NSE and OTC markets) Provide orderly process flow for logging of investors/participants securities Primary agent in determining the price discovery of tradable assets Fiduciary duties with a high level of responsibility for investors/participants assets Custodians SEC registration as a Custodian; ISA 2007 and SEC Rules (Nov 2012) Maintain assets on behalf of investors Safeguarding of investors/participants assets Others All other capital market participants (i.e. issuing houses, fund managers) require SEC Registration; ISA 2007 and SEC Rules (Nov 2012) Various roles and functions Capital market access and process flows 22-April-2013 The Nigerian Stock Exchange 6

7 Click Nigerian to edit Capital Master Market title style Development Securities Exchange and Commission (SEC) Enhanced Corporate Governance An update to the SEC Code of Corporate Governance was released in 2011 and has resulted in higher level of transparency, good governance and accountability in public companies Restoring Market Confidence Interaction with operators, investors and stakeholders to restore confidence Facilitating IFRS adoption in Nigeria Market operators required to maintain an annual fidelity bond with a Jan - Dec validity New Rules and Regulations New rules and amendments to regulations (i.e. market makers, rating agencies, risk management etc.) were implemented to strengthen capital market development Central Bank of Nigeria (CBN) Banking Reforms Completion of abolishment of Universal Banking model 30% Prescribed minimum liquidity ratio 10 % Capital Adequacy Ratio (15% CAR for banks with offshore elements) Healthy Banking System AMCON intervention and successful recapitalization of Nigerian banks Industry average Capital Adequacy Ratio (CAR) of 17.7%) Basel III implementation Monetary Tightening Policy MPR of 12% Inflation lowered to 8.6% (March 2013) 22-April-2013 The Nigerian Stock Exchange 7

8 Click NSE Function to edit Master in the Capital title style Market Primary market for the issuance of newly listed securities Secondary market for the trading of shares in listed companies Provide market data and transparency Regulate members and participants Monitoring of the market Protection of investors The NSE plays a vital role in the Nigerian capital market by: Providing a pricing mechanism between supply and demand for productive activities Providing a platform for capital raising including privatization and exit opportunities Authorizing and monitoring market operators Providing a robust capital market infrastructure and trading platforms Ensuring a orderly, fair and equitable market place by protecting the integrity of the market and investors from market manipulation Providing a medium of exchange for retail and institutional investors to build and preserve wealth, while maintaining a robust Investor Protection Fund 22-April-2013 The Nigerian Stock Exchange 8

9 Click NSE Recent to edit Achievements Master title style NSE PILLARS 2011 ACHIEVEMENTS 2012 ACHIEVEMENTS 1. Targeted Business Development Efforts Introduction of ETFs Market Segmentation NSE Lotus Islamic Index Xvalue Services 2. Strong Regulatory Environment Advocacy New Listing Rules Broker TraX Tool X-Compliance Report X-Qual Report 3. 21st Century Technologies Strategies New Web Site X-Net VPN 4. Growth-Enabling Market Structure Company Share Buy-Back 5. First-Rate Investor Protection Programs Market Making (rules approved) Securities Lending and Short Selling (rules approved) X-Gen Development Market Data Equity Primary Market Making Securities Lending and Short Selling Micro structure changes Investor Clinics Financial Literacy Investor Protection Fund BOT Launch 6. Advocacy and Market Development VAT and Stamp Duty Elimination Margin Debt Relief Investments in OTC Platforms 22-April-2013 The Nigerian Stock Exchange 9

10 Click Nigerian to edit Industry Master Sector title style Performance NSE YTD INDEX PERFORMANCE (as at Friday April 19, 2013) NSE Oil and Gas Index 29.32% NSE Lotus Islamic Index 28.58% NSE Insurance Index 26.74% NSE 30 Index 17.87% NSE All Share Index 17.50% NSE Consumer Goods Index 15.45% NSE Banking Index * NSE Industrial Index 10.26% 11.72% *As of launch date of April 10, % 5% 10% 15% 20% 25% 30% 35% 22-April-2013 The Nigerian Stock Exchange 10

11 Click Key 2013 to edit Initiatives Master title style NSE PILLARS SHORT-TERM (2013) 1. Targeted Business Development Efforts ASeM Re-Launch Derivatives Feasibility Study Product Innovation (e.g. Retail Bonds, NDRs) 2. Strong Regulatory Environment Enhanced Rulebook Issuer s Portal (XIssuer) Improved Cooperation with Other Exchanges and Global Organizations (IOSCO Affiliate Membership) Whistle Blowing Programme 3. 21st Century Technologies Strategies Delivery of New Trading Platform Automation of Transaction Lifecycle 4. Growth-Enabling Market Structure Transaction Cost Analysis Market Optimization 5. First-Rate Investor Protection Programs Financial Literacy Programme Operation of Investor Protection Fund 6. Market Development and Improved Operational Efficiency Policy Advocacy Corporate Social Responsibility (CSR) Programme Demutualization 22-April-2013 The Nigerian Stock Exchange 11

12 Click The Way to edit Forward Master title style The Five Pillars 1. Targeted business development efforts 2. Stronger regulatory environment st century technologies 4. Growth enabling market structure 5. First-rate investor protection programmes $1 Trillion Market Cap by April-2013 The Nigerian Stock Exchange 12

13 Click Conclusion to edit Master title style The Exchange will continue with innovations centered on technology and product development, as well as on advocating changes to policy. By the end of 2013, we will have established our technology competitiveness, restored our regulatory soundness, and advocated the policy changes necessary to enable us absorb the forces of change. The Exchange will be well-positioned to adapt our business to meet the shifting needs of its clients. Achieving competitiveness will be at the forefront of the Exchange s agenda. The Exchange will work to achieve its goal of transforming the Nigerian capital market and helping to facilitate the emergence of the next group of African Champions. We are on course to delivering service excellence, and positioning ourselves as the undisputed gateway to African markets. 22-April-2013 The Nigerian Stock Exchange 13

14 Click to edit Master title style Thank You Questions & Answers

15 Click to edit Master title style Thank You Stock Exchange House 2-4 Customs Street P.O. Box 2457, Marina Lagos Island, Lagos, Nigeria