21 January 2013

Nigeria: 2013 - NSE Foresees Another Rally for Stock Market

The Nigerian Stock Exchange (NSE) has projected another rally for the nation's stock market in 2013. The market had in 2012 posted a growth of 34.5 per cent after a decline of 16.3 per cent.

Reviewing the performance of the market in 2012 and outlook for the current year last week, Chief Executive Officer, NSE, Mr. Oscar Onyema, said while the market would continue to face challenges around liquidity and depth, he was optimistic that it would do well at the end of the day.

He said: "The Central Bank of Nigeria's (CBN's) efforts to achieve single-digit inflation and a lower monetary policy rate (MPR) should have a positive impact on the equities market. As investor confidence measures implemented by the NSE mature, we expect that a growth trend similar to that experienced in fourth quarter (Q4) 2012 will extend into 2013. On the fixed income side, we anticipate the relative attractiveness of FGN bonds will continue for local and global investors, as a result of record high yields."

He explained that the upcoming inclusion of Nigerian FGN bonds in the Barclay's Emerging Market Local Currency Bond Index, would keep the nation's bonds in the international spotlight.

He added that foreign issuers such as the International Finance Corporation (IFC) were expected to enter the Nigerian bond market this year.

According to him, other contributing factors to optimism about the capital market include: "Early passage of the national budget, which creates an impression that fiscal policy is being prioritised; the pronouncement to begin investing proceeds of the Sovereign Wealth Fund (SWF) in March 2013; elimination of VAT and stamp duties, which should take effect in 2013, freeing up funds for capital market investment; and continued product innovation by the exchange, such as the commencement of secondary bond market trading, and the introduction of new indices and Exchange Traded Funds(ETFs)."

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