Standard Chartered NSE Giant Strides to 1Tr 2013-10-08 Final

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Presented by

Oscar N. Onyema

CEOfor

STANDARD CHARTERED BANKS CAPITAL MARKET FORUMLagos, Nigeria

October 8, 2013

GIANT STRIDES:

Journey to $1 Trillion Market Capitalization


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2

Agenda

1

Nigerian Capital Market Milestones2

African Opportunity: Nigeria

3 Nigerian Capital Market Performance

4 Capital Market Ecosystem

5

Capital Market Growth Risks6

Targeting $1TRN, NSE Key Initiatives

7 Conclusion

The Nigerian Stock Exchange08-Oct-2013


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08-Oct-2013 The Nigerian Stock Exchange 3

The African Opportunity: Nigerias Profile

Total GDP: USD243.98 billion (2012)

Real GDP Growth (%): 6.18% (Q2 13)

Inflation (%): 8.2% (Aug 13)

External Reserves: US$45.7 billion (26 Sep 13)

External Debt: US$6.920 billion (Jun 13)

Total Population: 174.5bn (Jul 13 est.)

Main stock markets: NSE (Sep 13)

N17.72tr (US$114.16bn) Total market cap

N11.66tr (US$75.08bn) Equities market cap

Resources: Oil & Gas (2ndlargest oil reserves in Africa;

10thlargest in the world)

Mining: coal, minerals, precious metals

Commodities: agriculture, timber, rubber

Industries:

Leather, textiles, cement, fertilizer

Best Performing Sectors: (Q2 13)

Agriculture (40.1% of GDP)

Wholesale & Retail Trade (17.3%)

Crude, Petroleum & Natural Gas (12.9%)

Telecommunications (8.4%)

Others (6.7%)

IVORYCOAST

Kenya

ETHIOPIA

ERITREA

SUDAN

EGYPT

NIGER

MAURITANIA

MALI

NIGERIASOMALIA

NAMIBIA

LIBYA

CHAD

SOUTH AFRICA

TANZANIA

DEM REPCONGO

Angola

ALGERIA

MOZAMBIQUE

BOTSWANA

ZAMBIA

GABON

CENTRAL AFRICANREPUBLIC

TUNISIA

MOROCCO

UGANDA

SWAZILAND

LESOTHO

MALAWI

RWANDA

BURUNDI

TOGO

BENIN

Ghana

LIBERIA

SIERRA LEONE

GUINEA

BURKINA FASOGAMBIA

CAMEROON

SO TOME & PRINCIPE

ZIMBABWE

REPUBLIC OFCONGOEQUATORIAL GUINEA

WESTERNSAHARA

DJIBOUTI

SENEGAL

GUINEA-BISSAU

COMOROS

CAPE VERDE

MAURITIUS

MADAGASCAR


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1961

Trading began with 19 listed

securities - 3 equities, 6 Govtbonds and 10 corporate

bonds

Milestones in the Nigerian Capital Market

Since its inception, the NSE has assisted

corporations with raising capital through

the issuance of equity and fixed-incomeproducts

The NSE has provided a platform for the

FGN, individual States and Local

Governments, and other government

entities to raise funds for various types of

projects through the issuance of debt

The NSE is positioning to become the

Gateway to African Markets

To achieve this, the Exchange has

embarked upon a transformation

program to compete effectively in theglobal marketplace, while meeting the

changing needs of our clients, and

facilitating the mid- to long-term

financing needs of the nation

1960

The Nigerian Stock Exchange

(NSE) was founded as theLagos Stock Exchange

1970s

The Lagos Stock Exchange

becomes the NSE and several

branches (with trading floors)

are opened across Nigeria

1980s

Focus on increasing corporate

governance in the market, on

the back of international

exposure via Reuters

1990sThe IPF is operational; policy

is enacted to encourage

foreign participation; and the

Exchange automates trading

2000sModernization, strong GDP

growth, an influx of local/

foreign participation ignite

the market; weak regulatory

practices rupture the market

The Nigerian Stock Exchange 408-Oct-2013


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The Nigerian Stock Exchange 5

An Attractive Investment Destination

3rdLargest Exchange in Africa by Market Cap*

Approx. 5 million investors:*Local YTD49.1% of market activity

Foreign YTD50.9% of market activity

Avg. daily value traded YTD (N4.42b, $28.49m)

Avg. daily volume traded YTD (450.50m)

234 Active dealing member firms

48 Dealing members/Issuing houses

20 Ordinary members/Issuing houses

Equities and products:Total Market Capitalization (N17.72t, $114.16b)

196 listed equities (N11.66t, $75.08b) and

189 operating companies;

57 bonds(N5.98t, $9.07b)

1 ETF (N311.40m, $2.01m)

Founded in 1960

14 electronic trading floors around Nigeria

Data/figures as at the end of Aug 2013

Figures as at September 30, 2013

The Nigerian Stock Exchange

08-Oct-2013


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ASI Index Value

Value Traded (N) Turnover Velocity (Annualized)Equities (%)

Market Capitalization (N)


9.5

15.42

5.57

0

4

8

12

16

20

Q1 2013 Q2 2013 Q3 2013Monthly total value traded (turnover) divided by Month-end equities

market capitalization) x 12 expressed as a percentage (WFE)

16.4117.44 17.72

0

5

10

15

20

Q1 2013 Q2 2013 Q3 2013

33,536.25

36,164.3136,585.08

31,000

32,000

33,000

34,000

35,000

36,000

37,000

Q1 2013 Q2 2013 Q3 2013

255,034

336,653

196,832

0

100,000

200,000

300,000

400,000

Q1 2013 Q2 2012 Q3 2012

Millions

NSE Baseline Market Statistics (YTD)


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56.72%

28.80%

22.61%

13.78% 12.63%10.54%

12.71%

5.39%

0.84%

-2.21%

-6.06%-8.18%

-13.06%

-19.66%-22.14%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

Ghana

Comp.

Nigeria ASI Nairobi SE DJIA S&P 500 SEMDEX NASDAQ

Composite

FTSE 100 FTSE/JSE FTSE AIM MASI Hang Seng WIG 20 EGX 100 IBovespa

Global Exchange Metrics Indices

Strong Global Performance (H1 13)

7

H1 13 performance shows the DJIA performing at 13.78%reflecting the impact of the USs QE stimulus

Although QE is driving performance of US capital markets, the

Nigerian market is being driven more and more by local investors

as stated previously

As QE is phased out, global investors may seek to cover positions

in their respective local markets which may impact Nigeria in

terms of foreign investors looking to sell down

Performance in the Euro zone as reflected in the FTSE AIM is still

sluggish as a result of the lingering debt crisis Globally, Nigeria remains one of the most attractive markets



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The Nigerian Stock Exchange 8

Nigerian Capital Market Ecosystem Key Players

NSE (SRO) Only operating exchange for

listing companies

SEC (Apex Regulator) Maintains primary oversight of

the capital market

Investors/Participants Originate orders

Registrars Maintain registers of company

shareholders

Broker-Dealers Bring issuers to the market;

execute buy/sell orders

Custodians Maintain assets on behalf of

investors

Trustees Maintain assets on behalf of

investors

CSCS Sole provider of clearing and

settlement services

08-Oct-2013

Others Issuing houses, OTC platforms,

fund managers etc.


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Click to edit Master title style|The Nigerian Capital Market Today

Exchange-driven reforms have

strengthened the market, e.g., regulatory

oversight is stronger, the market is moreefficient, and investors can count on a

higher level of protection

The Exchange is focused on establishing

technology competitiveness, and is

advocating policy changes necessary to

enable the Nigerian capital market absorbthe forces of change

The Exchange is facilitating the creation

of African Business Champions of

tomorrow


2010s

Reforms take hold in the

Nigerian capital market:growth-enabling market

structure; stronger regulatory

environment; targeted

business development

efforts; 21stcentury

technologies; first-rate

investor protection programs;

market development and

improved operational

efficiency

$1 Trillion

Market Cap


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08-Oct-2013 The Nigerian Stock Exchange 10

NSE Key Initiatives

Term

2011 2012 2013 2014

NSEKeyInitiative

s

WithinNSE

Control

- Market Segmentation

- Company Share Buy-Back

- Introduction of ETFs

- Investor Clinics

- New Web Site

- Revised Listing Rules

- Market Making (approved)

- Securities Lending (approved)

- Short Selling (approved)

- Enhancement of Regulatory Programs

- Financial Literacy Program

- IFRS Compliance

- Market Data Services

- Advocacy

On-going

- Develop Product Liquidity and Depth

- Attract and Retain More Listings

- ASeM Re-Launch

- X-Issuer Portal

- CSR Program

- Delivery of X-Gen

On-going

- Product Innovation (e.g. ETFs, NDRs)

- Coop with Other Exchanges & Global

Orgs

- Policy Advocacy

- Demutualization

- Derivatives Feasibility Study

- Transaction Cost Analysis

- Enhanced Rulebook

- Whistle Blowing Program

- Market Optimization

- Operation of Investor Protection Fund

- Automation of Transaction Lifecycle

OutsideNSE

Control

- AMCON Debt Resolution

- Advocacy

- Review PFA Investment Guidelines

- Tax Breaks on Transaction Fees

- Exit Strategy for Privatized Entities

- Broker Margin Debt Resolution

- Broker Access to Funding

- Policy on Large Cap Firms

- Access to SWF Funds

- Reduce Focus on Dividends

- Capacity of Local Institutional Investors

(on-going)


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Clear delineation and segregation of

responsibilities between capital market

operators

Robust regulation and risk based supervision

Greater enforcement of laws, rules and

policies

Cultivation of strong and extensive network of

domestic talent

Greater array of products and services

Good corporate governance

Quality new listings

Imbalance between supply and demand,

and oversubscription of quality listed

companies

Inadequate talent pool in the region to

support rapid growth

Effective information dissemination

Sufficient legal due process and protection

Sufficient due diligence by market players

Relatively few listed companies when

compared to regions like China and India

Low liquidity Government policy

11

Capital Market Growth Risks

Risks Risk Mitigation Measures



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Conclusion

The Exchange will continue work to:

innovate on technology and product development

achieve efficiency and liquidity

advocate growth enabling policy positions

restore investor confidence, as we improve our regulatory soundness

adapt to meet the shifting needs of its clients

achieve competitiveness as a focal point of its agenda

achieve its goal of transforming the Nigerian capital market

We are on course to delivering service excellence, and positioning ourselves as the undisputed

gateway to African markets.



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Thank You

Stock Exchange House

2 - 4 Customs StreetP.O. Box 2457, Marina

Lagos Island, Lagos, Nigeria

[email protected]

THANK YOU

Questions & Answers

Documents

Standard Chartered NSE Giant Strides to 1Tr 2013-10-08 Final