From Cyriacus Nnaji, Lagos
The Nigerian Stock Exchange (NSE) has obtained the Securities and Exchange Commission (SEC) final approval termed ‘no objection’ for the demutualisation of the nation’s bourse.
The NSE Chief Executive Officer, Mr Oscar Onyema, said this on Monday at the 2019 Market Recap and 2020 Outlook held in Lagos.
Onyema said that the letter was received by the exchange in December 2019 for final stage of the demutualisation process.
Demutualisation of a stock exchange is a process by which a non-profit, member/brokers owned mutual exchange is converted into a profit-seeking shareholder corporation, open to members of the public.
Demutualising an exchange therefore transforms it from being owned by members or brokers, to one with a different governance structure where members of the public can buy shares.
“Now that we have seen the ‘No objection’ letter from the SEC in December, we are now putting in place final touches to have the court ordered meeting and the Extra Ordinary General Meeting (EGM).
“There will be significant engagement with investors, press and our primary constituency, the brokers and other members of the exchange and the general public. So there is a very robust plan already in place.
“We are working as quickly as we can to complete it and we hope that very soon, we will put out the notices for the EGM.
“There is statutory requirement, you have to wait for 28 days for the court ordered meeting and 21 days for EGM.
“We are following the process and we worked through the holiday period to see how quickly we can bring in these meetings,” he said.
Onyema said that the corporate structure of the exchange would change with demutualisation.
Onyema who presented the key performance of the nation’s capital market in 2019, gave a prognosis for the market in the New Year, 2020.
He stated that the Nigerian capital market mirrored the performance of the larger economy, which continued its moderate path of recovery, growing by 2.28% (Q3’19).
“The Nigerian bourse witnessed the impact of various factors including a weak macroeconomic landscape; fiscal and monetary policy direction; underwhelming trends in Foreign Portfolio Investments, concerns around the stability of the naira and moderate corporate earnings.
“While these factors led to a negative performance in the equity market during the year, our Fixed Income market performed exceptionally well, reflecting a flight to safety,” Onyema stated.
Looking at Global Capital Market, he disclosed that from an international investor’s perspective, the Nigerian bourse had to compete with developed and emerging capital markets which saw risk-based assets priced/valued more competitively.
“Capital conducive US Fed policy enabled foreign investors to economically enhance leverage and seek investment opportunities in their home and adjacent countries, necessitating Africa’s largest economy to adjust to new economic realities.”
On product performance he said: “Although the Nigerian Stock Exchange’s All Share Index (ASI) posted a negative return of -14.60% to close the year at 26,842.07, the ASI reached a year-high of 32,715.20 in February 2019.”
He furthermore stated that the equity market capitalization increased by 10.55% to N12.97trn from N11.73trn in 2018, largely due to sustained primary market activities throughout the year, most notably the listings of MTN Nigeria Communications Plc and Airtel Africa.
Onyema said that to support the equity market in 2019, The Exchange rolled out various initiatives such as: a new market structure to enhance liquidity and ensure overall market stability alongside efficiency, the launch of the beta version of the X-Mobile (a dynamic and user-friendly mobile app) to boost retail investors’ participation. (With additional report from NAN)