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CAPITAL MARKET

FG Raised N1.6trn From Capital Market In 2018

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The federal government  raised a total of N1.6 trillion from the Nigerian capital market in 2018.

The chief executive officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema disclosed this at the 2018 market performance and outlook for 2019 in Lagos, Nigeria.

He said that capital raising was dominated by the federal government, being responsible for 79.3 percent of bond issuances during the period in a bid to finance fiscal and infrastructure deficits, while State governments raised N125.59 billion in new debt capital.

Also, he noted that capital raising by corporates declined by 39.09 per cent with a total of N31.47 billion in 2018.

Onyema stated that the Nigerian economy continued its path of recovery, growing by 1.81 per cent year on year in real terms as at the third quarter of 2018, saying that the recovery was bolstered by increased stability in the macro environment as the CBN continued to pursue a relatively tight policy stance in an effort to curtail inflation.

Reviewing the performance of the market in 2018, the NSE CEO noted that “NSE equity market started the year on a high, with the All Share Index (ASI) reaching a ten-year peak of 45,092.83 in January.

“This was largely driven by the positive performance of the ASI in 2017 which emerged the best in Africa. As we approached the second quarter, political risks, oil price volatility and rising global yields resulted in bearish sentiments that saw the ASI and equity market capitalization fall by 17.81 per cent and 13.87 per cent to close at 31,430.50 and N11.73trillion respectively.”

He stated further that “listing activity remained relatively low during the year, (one listing and four delistings) equity turnover remained relatively stable, marginally declining by 5.45 per cent to N1.20 trillion.

“Turnover velocity inched up 0.91 percentage points to 10.25 per cent, and likewise, the size of volumes traded in the period increased by 0.96 per cent to 101.43 billion with the Financial Services sector being responsible for the highest traded volume and value.”

According to Onyema, in the year under review, foreign portfolio investments outpaced domestic participation by 1.73 percent, accounting for 50.87per cent of total transactions, while domestic transactions accounted for 49.13 per cent.

He pointed out that the market also witnessed the listing of a N100 billion FGN Ijarah Sukuk designed to finance critical road infrastructure across the country.

With regards to NSE derivatives initiative, Onyema said that “our technology infrastructure has been enhanced to support the trading launch. The rulebook has been created and is currently going through the approval process alongside on-boarding of dealing members.”

On the outlook for 2019, Onyema noted that the market sentiments in the first half of the year will be driven by uncertainty in oil prices as well as the 2019 general elections. “Accordingly, we anticipate volatility in equities markets first half of 2019, with enhanced stability post-elections. We believe swift approval and implementation of the 2019 budget will have a positive impact on companies’ earnings as well as consumer spending. Therefore, we expect an uptick in market activity during the second half of 2019.”


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