The Nigerian Stock Exchange has begun market segmentation exercise that will categories the quoted companies by industry, market capitalisation and whether they are growth or income stocks.
The Chief Executive Officer of the Exchange, Mr. Oscar Onyema, speaking recently at a Dinner with the CEOs of quoted companies said the exercise would consolidate the thirty three segment classification of the Daily Official List into 12 sectors, to better reflect global standards and international industrial classifications.
Onyema noted that the Market Capitalisation and growth/income segmentation would give the Exchange a more detailed understanding of quoted companies, and in turn provide input into investor education efforts regarding portfolio construction, asset allocation and risk diversification.
“The new sectors which include four, which are crucial to the Nigerian economy but are extremely underrepresented in our markets: agriculture (more than 40 per cent of GDP), oil and gas (over 90 per cent of export earnings), telecommunications (over 80 million GSM subscribers and including the fastest growing telecoms operator in sub-Saharan Africa) and the utility sector.
These sectors are priority areas for us in terms of our efforts to attract new companies to the Exchange,” he said.
Onyema noted that the Exchange has also introduced value added services such as corporate governance, investor relations, institutional services, analyst coverage, and corporate access which according to him, would form a crucial part of sales and retention efforts.
He said the aim was to ensure that all the listed companies realised the value of listing on the Exchange.
Onyema stated that the Exchange currently lists equities and bonds, but the market was dominated by equities, with minimal trading in bonds.
“As well as increasing market activity in both equities and bonds, we also plan to introduce exchange traded funds, options and financial futures. Indeed we are on course to introduce our first ETF this year.
These initiatives are a vital part of increasing the vibrancy, depth and competitiveness of the Exchange. Naturally, the introduction of these products will be accompanied by extensive education of both operators and investors,” he said.
Onyema added that the Exchange was facilitating buy back of company shares, and that the proposed rules have been filed with the SEC for approval, adding that it is also acquiring a cutting edge trading platform and improving operator and investor experience in dealing with the Exchange.