Although the Nigerian Stock Exchange (NSE) Initial Public Offering (IPO) activity was mute in 2020, the value of supplementary issues increased dramatically from 2019, rising by 851.37 percent to N1.42 trillion, from N148.77 billion.
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 N960 billion in 2019 to N1.03 trillion in 2020.
Also noteworthy was 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%; Institutional: 55.02%) while foreign portfolio investors accounted for 34.72 percent.
Capital-raising activities in the fixed income market also increased significantly in 2020.
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.
Some of the ground breaking achievements of the NSE for the year include:
- The historic listing of Interswitch’s N23 billion 15.00% Fixed Rate Series 1 bond. The premier bond listing illustrates the potential of The Exchange to support FinTechs and growth companies across various economic sectors
- The listing of Dangote Cement’s N100 billion 12.50% Series 1 bond under its N300 billion bond programme which became the largest corporate bond issuance in Nigeria’s fixed income market
- Listing of Primero Plc’s first bond on the NSE – the Primero BRT Securitization SPV Plc bond valued at N16.5 billion.
The NSE Exchange Traded Fund (ETF) market also experienced its best year yet as market capitalization increased by 272.30 percent from N6.58 billion recorded in 2019 to N24.51 billion in 2020 while trade volumes increased by 218.23% from 4.15 million units in 2019 to 13.20 million units in 2020, and turnover skyrocketed by 51,830.59 percent.
These achievements according to Oscar Onyema, CEO of the NSE, can be attributed to several factors, including:
- growing adoption of the asset class by investors and asset managers on the back of strong year on year growth;
- launch of two new ETFs – Meristem Growth ETF and Meristem Value ETF by Meristem Wealth Management Limited which track the NSE Meristem Growth Index and NSE Meristem Value Index respectively; and
- unattractive yields in the fixed income market which led investors to seek alternative asset classes as also experienced in the equity market.