How Federal Government raises N2.36 trln, Corporates N192 bln via capital market in 2020 ~NSE CEO
By Samuel Bankole
The Nigerian Stock Exchange (NSE) on Tuesday said the bull run in 2020 on the local bourse was largely driven by the “unattractive fixed-income yields and better-than-expected corporate earnings of listed companies.”
The country’s equity market had emerged as the best-performing index in the world, surpassing the S&P 500 16.26 percent, Dow Jones Industrial Index 7.25 percent and other global and African market indexes, to post a one-year return of 50.03 percent.
The chief executive officer of the local bourse, Oscar Onyema at a briefing said; “For The Exchange, renewed investor optimism coupled with improved economic conditions and low fixed income yields propelled a year-end bull run.”
Onyema said that at the close of the year, the NSE’s equity market capitalization was up by 62.42 percent, from N12.97 trillion in 2019 to N21.06 trillion in 2020 while market turnover saw an uptick of 7.25 percent, from N0.96 trillion in 2019 to N1.03 trillion in 2020.
According to him, though Initial Public Offering (IPO) activity was mute, the value of supplementary issues increased dramatically from 2019, rising by 851.37 percent to N1.42 trillion, from N148.77 billion.
“Also noteworthy is that for the second consecutive year, equity market transactions were dominated by domestic investors who accounted for 65.28 percent of market turnover by value (Retail: 44.98 percent; Institutional: 55.02 percent) while foreign portfolio investors accounted for 34.72 percent,” the NSE CEO said.
The NSE’s bond market capitalization rose by 35.52 percent from N12.92 trillion in 2019 to N17.50 trillion.
Continuing the trend in recent years, the Federal Government of Nigeria dominated issuances, raising over N2.36 trillion which comprised 92 percent of total bond issuances. Corporates also leveraged the low yield environment to fund expansion objectives and pursue debt refinancing, raising a total of N192 billion.
“The year has started on a positive note as the ASI has already returned 2.0 percent after 11 trading sessions.
“We expect the marginal reopening of businesses, normalization of the economy and revenue-diversification drive of the Nigerian government to elicit positive sentiments throughout the year.
“Our growth expectations should be noted with caution, as the recent second wave of COVID-19 in Nigeria and globally, may slow down renewed social and economic activities,” Onyema said.