Click to edit Master title style 2013 MARKET OUTLOOK Presented by Oscar N. Onyema CEO January 17, 2013
Click Outline to edit Master title style Summary 2012 Market Review Macro Economic Performance Capital Market Snapshot 2012 Achievements 2013 Outlook Projections 2013 Key Objectives Conclusion Q&A Rev 4/23/2013 The Nigerian Stock Exchange 2
Click Summary to edit Master title style The Nigerian Stock Exchange (NSE) was one of the top performing exchanges globally in 2012. The NSE All Share Index (ASI) grew 35.45%, and average daily turnover for equities was N2.65 billion ($17.07 million), up 4.74%. The capitalization of listed equities grew 37.36% from N6.54 ($41.87 billion) to N8.98 trillion ($57.83 billion). The year closed with two (2) new equity listings on the Main Board and 10 new bond listings. In 2012, the NSE executed a number of key strategic initiatives, among which were Primary Market Making, a suite of value-added services (X-value), and investments in two alternative trading platforms. The outlook for 2013 is largely positive for both the Nigerian economy and the Nigerian capital market as changes implemented in 2012 begin to crystallize in 2013. By the end of 2013, the NSE expects to be well-positioned to adapt our business to meet the needs of our clients, and to enable the Nigerian capital market absorb the forces of change reshaping global financial markets and the global exchange landscape. Rev 4/23/2013 The Nigerian Stock Exchange 3
Click Nigeria to edit in 2012 Master title style Highlights Government policy on fuel subsidy in January 2012 stalled economic activities in the first quarter GDP growth - 6.48% (Q3 2012) Double-digit inflation - 12.3% (Nov 2012) Double-digit lending rates - MPR of 12% (Nov 2012) The economy decreased it s dependency on Oil and Gas as a percentage of GDP (13.42% contribution in Q3 from 15.80% in Q1) Agriculture s contribution to GDP increased from 34.47% in Q1 to 42.62% in Q3 Nigerian government bonds included in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM) Rev 4/23/2013 The Nigerian Stock Exchange 4
Click Nigerian to edit Industry Master Sector title style Performance NSE INDEX PERFORMANCE Bloomberg NSE 30 44.63% NSE Lotus Islamic 44.21% Bloomberg NSE Consumer Goods 42.29% NSE All Share Index 35.45% Bloomberg NSE Banking 23.84% Bloomberg NSE Insurance -17.45% Bloomberg NSE Oil/Gas -30.53% -50% -30% -10% 10% 30% 50% Rev 4/23/2013 The Nigerian Stock Exchange 5
Nairobi ASI Nigeria ASI Ghana Comp. EGX 100 FTSE/JSE ASI HANG SENG WIG20 NASDAQ Comp. S&P 500 IBOVESPA DJIA FTSE 100 FTSE AIM SEMDEX MASI Click Global to Exchange edit Master Performance title style 50% 2012 Key Index Performance 40% 38.72% 35.45% 30% 26.61% 24.46% 22.71% 20.70% 20% 17.72% 15.91% 13.41% 10% 7.39% 7.26% 5.84% 0% 0.56% -10% -20% -8.00% -14.46% Rev 4/23/2013 The Nigerian Stock Exchange 6
Millions Click Market to edit Snapshot Master & title FPI style 2011 2012 % Change Total Market Capitalization N10.28 trillion $62.23 billion N14.80 trillion $95.32 billion 43.97% FPI MARKET ACTIVITY Equities Market Capitalization N6.54 trillion $41.87 billion N8.98 trillion $57.83 billion 37.36% Bonds Market Capitalization N3.74 trillion $23.94 billion N5.82 trillion $37.48 billion 55.61% $8,000 NSE All Share Index 20,730.63 28,078.81 35.45% Bloomberg NSE 30 Index 923.77 1,336.07 44.63% $6,643 Bloomberg NSE Consumer Goods 589.60 838.97 42.29% Bloomberg NSE Banking Index 274.26 339.63 23.84% Bloomberg NSE Insurance Index 143.54 118.49-17.45% $6,000 $4,893 $5,511 $4,716 Bloomberg NSE Oil/Gas Index 220.11 152.92-30.53% NSE Lotus Islamic Index 1,226.74 1,769.07 44.21% Total Volume - Equities 82.30 billion 89.15 billion 8.32% $4,000 $2,851 $3,855 Total Value (Turnover) - Equities N622.60 billion $3.99 billion N657.77 billion $4.24 billion 5.65% $2,000 Avg. Daily Volume - Equities 334.54 million 359.50 million 7.46% Avg. Daily Value (Turnover) - Equities N2.53 billion $16.20 million N2.65 billion $17.07 million 2.71% Turnover Ratio - Equities (%) 9.52 7.33-23.00% No. of New Issues 11 12 Value of New Issues N1,810.39 billion $11.59 billion N195.36 billion $1.26 billion $0 2007 2008 2009 2010 2011 2012* *All December figures not yet reported. Rev 4/23/2013 The Nigerian Stock Exchange 7
No. of Issues Click Market to edit Snapshot Master title style EQUITIES Number of listed companies at the end of 2012 decreased from 194 to 191. Number of listed equities also declined to 198 from 201. Zero IPOs, two (2) new listings on the Main Board. Four (4) companies delisted. Three (3) banks delisted and relisted in compliance with the holding company structure mandate by the Central Bank of Nigeria (CBN). NUMBER OF NEW ISSUES (Bonds and Equities) 13 12 11 10 9.09% 12 11 2011 2012 HIGHLIGHTS Total market for capitalization for equities and fixed income securities increased 43.97% to N14.80 trillion ($95.32 billion). % GROWTH IN MARKET CAPITALIZATION Mid Cap Large Cap Market capitalization for all listed equities on the Main Board and on the Alternative Securities Market (ASeM) rose by 37.36%. Small Cap 9.59% 39.70% 43.78% 0% 10% 20% 30% 40% 50% Small Cap Large Cap Mid Cap Rev 4/23/2013 The Nigerian Stock Exchange 8
Click Market to edit Capitalization Master title by style Segment MAIN BOARD ASeM 1% 1% 0% 2% 1% 0% 1% 1% AGRICULTURE CONGLOMERATES CONST./REAL EST. 27% CONSUMER GOODS 32% FINANCIAL SERVICES HEALTHCARE ICT INDUSTRIAL GOODS NATURAL RES. OIL AND GAS 34% SERVICES 57% 1% 2% 0% 3% 0% 37% CONST./REAL EST. CONSUMER GOODS HEALTHCARE INDUSTRIAL GOODS NATURAL RES. OIL AND GAS SERVICES BONDS 6% 24% CORPORATE BONDS/DEBENTURES GOVERNMENT BONDS- FEDERAL 70% GOVERNMENT BONDS- STATE & LOCAL Rev 4/23/2013 The Nigerian Stock Exchange 9
% of total value traded NGN (=N= brillion) Click Market to edit Snapshot Master (contd.) title style TOTAL TURNOVER (N) - EQUITIES 670 660 5.65% 650 640 657.77 TURNOVER HIGHLIGHTS Total turnover was N657.77 billion ($4.24 billion). Average daily turnover was also up 4.74% compared to -20.71% experienced in 2011. 630 620 610 600 622.6 2011 2012 Turnover ratio for 2012 was 7.33% down 23.00% from 2011 (9.52%). 100% 80% 60% 40% 20% 0% 85% 84% 15% 17% FPI CONTRIBUTION 69% 64% 31% 36% 33% 67% 44% 56% 2007 2008 2009 2010 2011 2012* Foreign Investors Local Investors *All December figures not yet reported. BONDS Market capitalization of bonds soared 55.61% to N5.82 trillion ($37.48 billion). Seven (7) new State and Corporate bond issues, and three (3) Federal Government bond issues. The value of cash transactions for government bonds, fell for the third consecutive year by 11.14%, to N7.10 trillion ($45.73 billion). Increased focus on Treasury bills (T-bills) in 2012; cash transactions valued at N13.92 trillion ($89.65 billion), a 28.75% increase over the previous year Rev 4/23/2013 The Nigerian Stock Exchange 10
Click The Way to edit Forward Master title style The Five Pillars $1 Trillion Market Cap by 2016 5. First-rate investor protection programmes 1. Targeted business development efforts 2. Stronger regulatory environment 4. Growth enabling market 3. 21 st structure century technologies Rev 4/23/2013 The Nigerian Stock Exchange 11
Index Value Click Results to of edit Collaboration Master title style 30,000 25,000 The year starts off slow due to the removal of the fuel subsidy. In September, the NSE launches its Market Making initiative with 10 stockbroker firms. 10.66% The market experiences a growth of 10.66% to the end of the year following the implementation of the NSE s 2012 key initiatives. 20,000 Market experienced steady growth as Investors start returning to the market. 15,000 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Rev 4/23/2013 The Nigerian Stock Exchange 12
Click 2012 to Achievements edit Master title style NSE PILLARS ACHIEVEMENTS Targeted Business Development Efforts NSE Lotus Islamic Index Xvalue Services Strong Regulatory Environment New Listing Rules Broker TraX Tool X-Compliance Report X-Qual Report 21st Century Technologies Strategies New Web Site X-Net VPN X-Gen Development Market Data Growth-Enabling Market Structure Equity Primary Market Making Securities Lending and Short Selling First-Rate Investor Protection Programs Financial Literacy Investor Protection Fund Launch Market Development and Improved Operational Efficiency VAT and Stamp Duty Elimination Margin Debt Relief Investments in OTC Trading Platforms Rev 4/23/2013 The Nigerian Stock Exchange 13
Click 2013 to Outlook edit Master 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. 2013 projected growth for Africa at 4.8%. 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. Rev 4/23/2013 The Nigerian Stock Exchange 14
Click Nigerian to edit Capital Master Market title style and NSE Outlook The Nigerian Capital Market will continue to face challenges around liquidity and depth, but concerted efforts to address the situation are underway. Expect growth trend experienced in Q4 2012 to extend into 2013 as investor confidence measures by the NSE mature. Anticipate the relative attractiveness of FGN bonds to continue for local and global investors, as a result of recordhigh yields and new attractive issuance. National bonds to remain in the international spotlight due to their upcoming inclusion into Barclay s Emerging Market Local Currency Bond Index. Foreign issuers such as the International Finance Corporation (IFC) are expected to enter the Nigerian bond market. Contributing factors to optimism about the capital market include: Early passage of the national budget; Pronouncement to begin investing proceeds of the Sovereign Wealth Fund (SWF) in March 2013; Elimination of VAT and stamp duties, expected to take effect in 2013; and Continued product innovation by the Exchange, including the commencement of secondary bond market trading, and introduction of new indices and ETFs. Rev 4/23/2013 The Nigerian Stock Exchange 15
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. ETFs, NDRs) 2. Strong Regulatory Environment Enhanced Rulebook Issuer s Portal Improved Cooperation with Other Exchanges and Global Organizations 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 Rev 4/23/2013 The Nigerian Stock Exchange 16
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. Rev 4/23/2013 The Nigerian Stock Exchange 17
Click to edit Master title style Thank You Questions & Answers
Click to edit Master title style Thank You Stock Exchange House 2-4 Customs Street P.O. Box 2457, Marina Lagos Island, Lagos, Nigeria oonyema@nse.com.ng