Nigeria equity market has remained investors’ toast amid severe downturn in the economy occasioned by the novel Covid-19 pandemic.
Market transactions on the Nigerian Stock Exchange (NSE) show renewed confidence of domestic investors who take advantage of the low yield environment to position for greater share of the market.
The NSE Chief Executive Officer (CEO), Oscar Onyema, disclosed this during a webinar conference organised by the Exchange in Lagos, with the theme: ‘Capital Markets in a Pandemic’.
Onyema pointed out that local bourse had recorded impressive performance with domestic investors accounting for 60 per cent of market transactions while market fundamentals remained encouragingly positive.
“Surprisingly, domestic investors have risen to the occasion in sustaining the equities market performance. This year, domestic investors have accounted for almost 60 per cent of the trading activity compared to an average of 51 per cent in the past four years.
“Despite these economic headwinds, the NSE All-Share Index has returned month-on- month gains of 8.1 per cent and 9.8 per cent at the end of April and May, respectively.
The pandemic has resulted in a decline in oil export earnings – which accounts for over 80 per cent of Nigeria’s export earnings – and remittances by Nigerians in the diaspora.
“Concurrently, foreign portfolio investor flight to safety has further intensified pressures on the nation’s foreign reserves and exchange rate,” Onyema said.
He said the Exchange continued to reach out to the dealing member firms via electronically, supporting corporates that are listed on the bourse and ensured that moving market information were sent out..
According to him, the remote trading and engagement of stakeholders had yielded results, pointing to the robust investor confidence the Exchange had continued to enjoy.
“What we have seen as a result is that there has been a significant increase in activities in the capital market at secondary level, driven by domestic players,” the CEO added.
Reaffirming the NSE commitment to digital technology as a way out of the Covid-9 challenge, Onyema said technology had long been a fundamental building block for growth in capital markets:
“Today, digitisation and advanced analytics offer tremendous new potential. The capital markets industry, today, finds itself in a transitional period where it can adapt to digital trends and technologies as well as innovate with new business models and products/services.
“At the NSE, we see asset digitalization beginning to create a whole new user experience. The Exchange has continued to leverage on its cutting-edge technology and various innovative platforms to ensure continued trading and listing activities on its bourse.”
The panelists include the Chief Executive Officer, World Federation of Exchanges, Nandini Sukumar, who noted that greater stakeholders’ efforts would guarantee capital market investment.
The Chief Executive Officer, Luxembourg Stock Exchange, Robert Scharfe, revealed that over $20 billion social and sustainability bonds, relating to Covid-19, had been listed on their Exchange over the past three months which points to market resilience during the period.
The Chief Executive Officer, London Stock Exchange, Nikil Rathi, predicted a radical change in investors’ approach to investment after the Covid-19 pandemic.
The NSE Council President, Otunba Abimbola Ogunbanjo, thanked the participants and expressed confidence that discussions held would lead global exchanges to bolster ecosystem resilience.
“It is my sincere hope that we will continue to sustain these conversations around business innovation and partnerships even as countries gradually reopen and economies resume their activities, Ogunbanjo added.