Vanguard (Lagos)

19 December 2012

Nigeria: NSE Targets Five Products to Attain U.S.$1 Trillion Capitalization in 2016

In a bid to attain the $1 trillion market capitalization target by 2016, the Nigerian Stock Exchange (NSE) has embarked on various initiatives and strategies aimed at repositioning the Nigerian stock market.

The new management of the NSE had commenced the journey of recovery with visible improvement and results being recorded on daily basis. The management had promised to turn out five products in five years and to meet a trillion dollar market capitalization mark in 2016.

Recently, the NSE unveiled added services to draw attention to the listed companies and enhance their performance, while working on identified prospects.

To achieve this, the NSE partnered with various local and international organisations to provide services such as: Corporate Access, Investor Relations, Institutional Services, Corporate Governance and Independent Equity Research to enhance the value proposition of listing on The Exchange.

While briefing the capital market community during the launching of valued added services recently in Lagos, Managing Director/ CEO of the NSE, Mr. Oscar Onyema disclosed that independent research firms (not attached to any brokerage firm or market operator), had been engaged to produce company reports for the investing public.

According to him, "Our focus is on less visible listed companies that are not covered by sell side analysts. We aim to raise these companies' profile and visibility amongst investors to ultimately engender more interest and activity on their shares.

"Unlike reports from sell side analysts, the NSE's research would not include the 'sell,' 'buy,' or 'hold' on any given stock, as is usual with analysts report from brokerage firms. Companies and individuals wishing to access the reports, training and others services offered by these partners, will pay a heavily subsidized price."

Commenting on the services launched, Onyema noted that corporate governance bouquet is to assist the boards and executive management of listed companies to adhere to international best practices in the way they run their firms and for long-term sustainability.

According to him, "Investors' relation is a well designed programme that will help to enhance the understanding of a company's strategic direction by the investing public, encourage informed deliberation and analysis among investors and analysts on a company's performance through provision of timely, appropriate and accurate information, thereby improving a company's market reputation and visibility.

"The top 50 stocks already have investor relations department or desk, a luxury most companies in the bottom 150 cannot afford, hence the decision of the NSE to provide a platform for such to tell their own stories "at a relatively cheap price."

In his own comment, the Chief of Staff and Head of Corporate Division, Mr. Bola Adeeko said, "We promised five products in five years and with the introduction of ETFs in December 2011, we are already on product number three out of five with more than three years to go.

Being aware of the need for liquidity in our capital market, the Exchange introduced market-making along with short selling and securities lending a few months ago and all of us gathered here today can attest to the fact that this has impacted our market positively." He added: "We revised our listing rules in 2012 to attract and retain more listings and have since strengthened our enforcement on compliance issues."

Speaking as well, Jude Fejokwu, who is partnering to provide independent equities analysis on the project, said the current efforts would allow for independent analysis of a company, which is better than the current situation where information about a quoted company is sourced from interested parties.

According to him, "It is important for investors to have information on the market from persons not directly linked to the market. (The reports are) to keep you informed so that you can proceed to make your own decisions."

Information for the research work, he said, were sourced from the figures provided by the companies, history, and discussions with their management, and on the value adding propositions of such effort, In his words, " The reports would give credibility to the NSE, value for money, and lead to greater market activity.

Jacob Esan, Executive Director, Investment Banking and Public Sector at Deap Capital said "An exchange is a market discovery platform for purchase and sale of stocks, this (effort) will expand investor base and increase the number of listed companies. We have to move our market and companies from where they are, to where they should be."

In his comment, Mr. Haruna Jalo-Waziri, executive director, Business Development, overseeing listing, sales and retention; business development, said, "NSE made history as the first capital market operator in Africa to introduce a Market Quality Report -The "NSE X-Qual Report" which is designed to disclose the extent to which equities traded at the exchange provide executions at prices better than the prevailing price quotes before an investor places an order.

Fielding questions, he noted that top exchanges across the globe offer some kind of value adding propositions, geared towards ensuring that listed companies reap some form of benefits, besides ensuring that people no longer buy stocks blindly.

The top 50 stocks, he said, already have investor relations department or desk, a luxury most companies in the bottom 150 cannot afford, hence the decision of the NSE to provide a platform for such to tell their own stories "at a relatively cheap price."

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