Click to edit Master title style - sec.gov.ng · Click to edit Master title style The Nigerian Stock Exchange Capital Market Reacts to Economic Trends August 2016 6 20,000 22,000

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Presented by

Oscar N. Onyema, OON

CEO

2nd Capital Markets Committee Meeting

August 9th, 2016

CAPITAL MARKET UPDATE

of the Nigerian Stock Exchange

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The Nigerian Stock Exchange 2

Outline

1• Q2’16 Briefing – Overview of Operating Environment

2• NSE Market Statistics

3• Global Competitive Report

August 2016


Q2’16 Briefing – Overview of Operating Environment


The Nigerian Stock Exchange

The World at a Glance

4August 2016

LATIN AMERICA & THE CARIBBEAN: -0.4%Economic contraction due topolitical uncertainty, policy stanceand climate–related factors e.g. Zikavirus.

US: 2.2%Moderate growth supported by a strongUSD and gradual monetary policynormalization.

THE MIDDLE EAST & NORTH AFRICA*: 3.4%Recent recovery in oil prices and continuing fiscalconsolidation increase regional growth prospects,despite economic effects of regional conflicts.

EUR0 AREA: 1.6%Growth driven by strong domestic demand and investmentrebound; with significant downside risks posed by uncertaintiesover the UK referendum and legacy issues in the banking sector.

SUB-SAHARAN AFRICA: 1.6%Challenging macroeconomic conditionsin leading economies drag on regionalgrowth as commodity prices remaindepressed.

ASIA & THE PACIFIC: 6.4%Growth driven by policy stimulus,increased infrastructure spending,credit growth and buoyant activity inleading regional economies.

• Despite modest recovery in financial and oil markets, global growth for 2016 was revised downward in July to 3.1%(Apr’16: 3.2%), as financial market disruptions and macroeconomic concerns over ‘Brexit’ continue to fuel uncertainty.

• Prospects for large emerging and developing economies (EMDEs) such as Brazil, China and Russia have improved in thenear term due to policy support and higher oil prices, amongst other factors.

• In Sub-Saharan Africa growth is expected to slow down to 1.6% in 2016, from 3.3% in 2015, amidst projections of acontraction of the Nigerian economy and flat growth of South Africa’s GDP.

KEY TRENDS IN THE GLOBAL ECONOMY**

*includes Afghanistan and Pakistan; **IMF World Economic Outlook, July 2016



Nigeria’s Economic Conditions

1 2

OVER A DECADE OF STABLE GROWTH HALTED BY THE EFFECTS OF LOW GLOBAL OIL PRICES

REAL GDP GROWTH DIPS TO NEGATIVE TERRITORY

5

CONTRACTION IN NOMINAL GDP

• On the back of low oil prices, dwindling foreign exchange revenues and resulting currency volatility, fuel shortages andpolicy uncertainty, the Nigerian economy recorded its first negative growth rate since the second quarter of 2004.

• Real GDP growth contracted to -0.36% in Q1’16, declining 2.47 ppts from Q4’15 , and 4.32 ppts over Q1’15.

• In nominal terms, Q1’16 GDP (N22.26Tn) declined 14.1% over the previous quarter (Q4’15: N25.93Tn).

• Supply chain disruptions resulting from foreign exchange and fuel shortages, reflected on the performance of themanufacturing sector, which declined 6.3 ppts (YoY) from -0.7% in Q1’15 to -7.0% in Q1’16.

• At the end of June’16, the Manufacturing Purchasing Managers' Index (PMI)* had recovered by 2.0 ppts to a fractionallypositive headline of 50.2 – still significantly below the June’15 headline of 56.0.

2.35%2.84%

2.11%

-0.36%

-1%

0%

1%

2%

3%

4%

Q2'15 Q3'15 Q4'15 Q1'16

YoY

GD

P G

row

th (

%)

22.86

24.31

25.93

22.26

20

22

23

25

26

28

Q2'15 Q3'15 Q4'15 Q1'16

No

min

al G

DP

(N

‘Tn

)

*PMI= First Bank of Nigeria (FBN) Quest Purchasing Managers Index

August 2016



Capital Market Reacts to Economic Trends

6August 2016

20,000

22,000

24,000

26,000

28,000

30,000

32,000

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16

NSE

All

Shar

e In

dex

Feb’16: Saudi, Russia, Qatar & Venezuela agree to freeze production.

Jan’16: NSE ASI records 2016 low of 22,456.32 on Jan 19th, shedding 21.60%.

May’16: NSE ASI dips slightly in reaction to EFCC arrests of bank MDs.

May – Jun’16:Rally & profit taking due to new FX stance; NSE ASI trending upward

Jan’16:CBN banssale of FXto BDCs.

May’16: President Buhari signs 2016 Budget into law.

Mar – Apr’16: Weak results of some major banks and other companies reveal fall in FY’15 earnings vs. FY’14 as highlighted in profit warnings issued in Q1’16.

Jun’16: The UK votes to leave Europe & FMDQ launches FX derivative products.



Nigerian Capital Importation Trends – CBN

7August 2016

• Total capital imported into Nigeria in Q1’16

amounted to $711Mn, the lowest quarterly

figure recorded since 2007.

• At $271Mn, Foreign Portfolio Investment (FPI)

declined by 72% from Q4’15.

• Fixed income as a component of FPI declined

sharply from 13% in 2015 to less than 1% in

Q1’16 highlighting the impact of Nigeria’s

exclusion from JP Morgan’s Gov’t bond index

in 2015.

FACTS AND FIGURES CAPITAL IMPORTATION BY TYPE – Q1’161 2

FOREIGN PORTFOLIO INVESTMENT BY TYPE 3

82% 88% 87% 77% 78% 74%

1% 4% 7% 16% 13%0.55%

17% 8% 6% 7% 10%25%

0%

50%

100%

2011 2012 2013 2014 2015 Q1'16

Equity Bonds Money Market

38%

37%

25%

Foreign PortfolioInvestment

OtherInvestment

Foreign DirectInvestment

Total value $711Mn

Source: NBS, CBN



Impact of Capital Controls on NSE FPI Activity

8August 2016

134.14

42.46

-100

-50

0

50

100

150

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Total Foreign Inflow (N'Bn) Total Foreign Outflow (N'Bn) Total Net Flow (N'Bn)

• Net inflow in April’16 of N76Mn after9 consecutive months of net outflowamounting to N99Bn.

• Net inflow sustained in May’16 andJune’16 following flexible FX policy inMay’16.


NSE Market Statistics



NSE Market Snapshot

10August 2016

67% 61% 51% 58% 54%43%

33% 39% 49% 42% 46%57%

0%

25%

50%

75%

100%

2011 2012 2013 2014 2015 H1'16

Mar

ket

par

tici

pat

ion

(%

)

Foreign Domestic

DOMESTIC VS. FOREIGN (EQUITY)NSE TOTAL MARKET CAPITALIZATION1 2

DOMESTIC INVESTOR BASE: H1’16 TOTAL FOREIGN PORTFOLIO FLOW (EQUITY)3 4

N1.04Tn N1.53Tn N1.02Tn N269.22Bn

11.21

15.92

19.08 16.88 17.00 17.28

0

5

10

15

20

2011 2012 2013 2014 2015 Jun'16

Mar

ket

Cap

(N

’Tn

)

51% 45% 46% 45%

49% 55% 54% 55%

0%

25%

50%

75%

100%

2013 2014 2015 H1'16

Fore

ign

Po

rtfo

lio F

low

(%

)

Inflow Outflow

52%48%

InstitutionalInvestors

Retail Investors



NSE Trading Statistics – Equity

11August 2016

FACTS AND FIGURES CROSS DEALS 1 2

VALUE TRADED AND NO. OF DEALS13 EQUITY MARKET MAKER VALUE TRADED 4

67 6273

63

88101

0

30

60

90

120

0

20

40

60

80

Jan Feb Mar Apr May Jun

No

. of

De

als

(‘0

00

)

Val

ue

Tra

de

d (

N’B

n)

Negotiated Deals EOB No of Deals

1.7 1.6

2.62.2

2.42.7

0

1

2

3

0

10

20

Jan Feb Mar Apr May Jun No

. of

De

als

(‘0

00

)

N’B

n

Value of Trades No. of Deals

823 851751

1,464

0

300

600

900

1,200

1,500

1,800

Q3'15 Q4'15 Q1'16 Q2'16

Val

ue

Tra

de

d (

N’M

n)

• The number of deals done on the NSE steadilyincreased between Jan‘16 and Jun’16 growingfrom 67,000 (N42.05Bn) to 101,000 (N77.92Bn).

• Cross deals increased by 59%, from 1,700(N5.65Bn) in Jan‘16 to 2,700 (N9.28Bn) inJun‘16.

• Value traded by Equity Market Makers have alsoincreased considerably from N823Mn in Q3’15to N1.45Bn in Q2’16.


9%

23%

68%

Scheme shares

Placing

Merger andAcquisition


NSE Listing Statistics

12August 2016

96%

Corporate, 3%

State Gov't, 1%

FGN: New issue

Corporate

State Gov't

Equity, 1%

99%

ETF,0% Equity

Bond

ETF

• As at June 30th 2016, total value of new listingsin 2016 amounted to N781.90Bn ($2.76Bn).

• Total equity listings were valued at 4.36Bn($15.39Mn).

• Federal gov’t raised N745.84Bn ($2.64Bn) –95% of total debt capital raised in 2016; Stategov’ts raised N11.95bn ($42.23Mn).

• Corporate entities raised a total of N19.76Bn($69.82Mn).

FACTS AND FIGURES NEW LISTINGS BY ASSET CLASS (BY VALUE) 1 2

NEW EQUITY LISTINGS BY METHOD OF ISSUE 4BOND LISTINGS BY ISSUER3

Total value N781.90bn

Total value N4.36bn

Total value N777.55bn


Global Competitive Report



Global Index Performance - 2016

14August 2016

1

2

REGIONAL INDEX PERFORMANCE – COMPARABLE AFRICAN INDICES1

GLOBAL INDEX PERFORMANCE – DEVELOPED, EMERGING AND FRONTIER MARKET INDICES

MSCI WORLD 2.69%

MSCI FM -2.65%

MSCI EM 10.25%

NSE ASI -2.08%

Nairobi ASI-2.58%

JSE/FTSE ASI5.11%

NSE ASI-2.08%

EGX3014.63%

FTSE ASEA -19.67%

70%

100%

130%

Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

Ind

ex

MSCI FM MSCI EM MSCI WORLD NSE ASI

70%

100%

130%

Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

Ind

ex

NSE ASI JSE/FTSE ASI FTSE ASEA EGX30 Nairobi ASI



Equity Market Snapshot H1‘16 – MINT + S

15August 2016

EQUITY MARKET CAPITALIZATION AVERAGE DAILY VALUE TRADED (USD’MN) 1 2

TURNOVER VELOCITY (ANNUALIZED)13 MARKET ACTIVITY – DOMESTIC VS. FOREIGN (%)4

0%

50%

100%

150%

Q3'15 Q4'15 Q1'16 Q2'16

Ind

ex

Borsa Istanbul IDX BMV JSE NSE

150%

30% 27% 21%8%

0%

60%

120%

180%

BorsaIstanbul

JSE BMV IDX NSE

1,6011,469

488 433

120

600

1200

1800

JSE BorsaIstanbul

BMV IDX NSE

100% 99.9%88%

70%57%

0.1% 12%30%

43%

0%

50%

100%

IDX BorsaIstanbul

BMV JSE NSE

Domestic Foreign



H1’16 Listing Activity – Benchmark Exchanges

16August 2016

1 EQUITY LISTINGS 1

Listings LSE JSE NSE

Equity Listings in 2016* 66 6 3

Value of 2016 Equity Listings* (USD‘Mn) 27,544 2,675 15

IPOs in 2016** 41 Nil Nil

Value of 2016 IPOs** (USD‘Mn) 1,357 Nil Nil

Number of Listed ETFs 889 46 7

New ETF Listings in 2016 83 Nil Nil

Value of 2016 ETF Listings (USD‘Mn) N/A Nil Nil

*Includes listing by IPOs, rights issue, placing, M&A, takeover bid, listing of underwriting commitment shares, employee share plan, memorandum listing, conversion of preference shares to ordinary shares, re-admission, introduction, waiver of pre-emptive rights.**Includes international offerings, offer for subscription, placing and placing & offer for subscription. USD/GBP = 0.75, USD/RAND = 14.73, USD/NGN = 283


NSE Stakeholders’ Engagement



NSE Stakeholders’ Update

18August 2016

• FPI’s free exit from the

market hindered by

capital control

measures.

• Market accessibility is a

key criterion for

inclusion in global

benchmark indexes.

• MSCI is currently

monitoring the

situation in Nigeria and

reviewing feedback

from investors.

• Successful prevention of N150Mn fraud in Q1’16 collaborating with EFCC.

• IPF claims worth N42.2Mn approved for payment.

• ~200 investor events held across Nigeria reaching ~13,000 people.

• Compliance status indicator (CSI) codes introduced to indicate compliance status of listed companies.

• 223 DMs were inspected under the MOS, and 209 (94%)* firms have complied with the standards.

• 24 active DMs suspended in Jan’16 in line with SEC capital requirements, seven (7) of which have now recapitalized.

• Palliatives of over N200Mn provided by NSE to support adherence to MOS.

• 12 listed companies

processed through the

CGRS program in 2015.

• 48%** of 132 active

listed companies have

submitted their CGRS

results.

• The NSE introduced a

Facts Behind the

Restructuring forum

for issuers undergoing

restructuring to

engage the investing

public.

MARKET PARTICIPANTS

INVESTOR COMMUNITY

DEALING MEMBERS

ISSUERCOMMUNITY

*As at August 9th, 2016**As at March 9th, 2016


NSE Strategic Focus in 2016



NSE Strategic Focus in 2016

20August 2016

Demutualization

of the NSE

Institutionalize

Market Services

Derivatives

(Pioneering the CCP)



Demutualization & Derivatives Project Update

21August 2016

DERIVATIVES PROJECT UPDATE

DEMUTUALIZATION PROJECT UPDATE

• Financial and legal advisers onboard to design

framework for the CCP entity.

• Foreign technical partners engaged to deliver the

systems.

• The derivative project indicative product rollout

schedule established.

• Meetings to sensitize and engage major stakeholders of

the CCP are ongoing.

• The NSE has commenced training of regulators and

market participants on derivatives.

• The NSE recently took part in a study tour of the

Chicago Mercantile Exchange and Chicago Board

Options Exchange as part of efforts to launch

derivatives.

• In November 2015, the NSE appointed financial, legal and tax advisers respectively on the proposed

demutualization of the NSE.

• The advisers completed their due diligence work in Q1‘16.

• The NSE together with its advisers have begun stakeholder engagement meetings to begin to address key

issues pertaining to the demutualization process.

• The project is currently ongoing.

Click to edit Master title style|NSE Awards & Accolades

22August 2016


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Click to edit Master title style - sec.gov.ng · Click to edit Master title style The Nigerian Stock Exchange Capital Market Reacts to Economic Trends August 2016 6 20,000 22,000