NGSE To Conclude Demutualisation This Year

•To Seek Members’ Approval
This management of the Nigerian Stock Exchange (NSE) says its demutualization may be concluded this year, following receipt of the necessary ‘No Objection’, by the Securities and Exchange Commission (SEC).
Demutualization is defined as a process where an exchange transforms from a member-owned, managed and non-for-profit institution, to a for-profit, shareholder-owned corporation. Demutualisation of a securities exchange also has the potential to fast-track its development, besides deepening the capital market; while improving corporate governance and competitiveness, even as analysts say it is not by itself a magic pill for all operational lapses in an exchange.
Addressing stakeholders during the “2019 Market Recap and 2020 Outlook” on Monday, chief executive of the NSE, Oscar Onyema said as part of the demutualization exercise, which is in line with the bourse’s aspiration to become more agile is set to seek formal approval from its members to proceed.
Although he did not give any possible date when the exercise will be concluded, a usually reliable capital market source told Investdata News that it could be around April this year, even as Onyema says the focus is on the strategic intent post-demutualization.
He stressed that the Exchange is committed to leveraging its vast network of stakeholders, in addition to developing new strategic partnerships to deliver better products and services to the investing public.
Recall that formally a Report of the Asue Ighodalo Technical Committee on the Demutualisation of the NSE was submitted to the SEC in March 2012.
According to the NSE boss, “we are committed to continually provide clarity on the demutualization process to our various stakeholders through regular engagements.”
He also spoke of the desire to “maintain momentum in executing the NSE’s 2018 – 2021 Corporate Strategy in our efforts to elevate the prominence of Africa’s global financial markets.”
Meanwhile, at the end of trading activities for the year 2019, the NSE’s benchmark All-Share Index (ASI) closed 14.60% south, closing the year at 26,842.07 basis points, despite reaching a year-high of 32,715.20 in February 2019. Equity market capitalization, he explained, rose 10.55% to N12.97tr, from N11.73tr in 2018, helped significantly by the sustained primary market activities throughout the year, especially the listings of MTN Nigeria Communications Plc and Airtel Africa.
NSE indices, he continued, were also negative returns during the year, led by the NSE Consumer Goods Index, which lost 20.83%, followed by “the NSE Main Board Index and NSE Lotus Islamic Index, which dropped by 20.00% and 17.87% respectively. The NSE Insurance Index and the NSE Premium Index were the least impacted, declining by 0.52% and 3.59% respectively.
This, Onyema explained, was due to the impact of various factors including the weak macro-economic landscape; fiscal and monetary policy direction; underwhelming trends in Foreign Portfolio Investments; concerns around the stability of the Naira and moderate corporate earnings.
“While these factors led to negative performance in the equity market during the year, our Fixed Income market performed exceptionally well, reflecting a flight to safety.”
Equity market turnover fell by 19.70% Y-o-Y from N1.2tr recorded in December 2018 to N0.96tr in the corresponding period of last year, with the financial services sector accounting for over 50% of total activity to remain the highest traded in volume and value, as was the case in 2018.
Turnover also increased by 389.26% when compared to 2018 although capital raising was dominated by the federal government, being responsible for 60% of bond issuances during the period in a bid to finance fiscal and infrastructure deficits.
Speaking on the efforts by the NSE’s management in 2020, the CEO said, “the year has started on a good note, with the NSE ASI recording a 9.41% improvement year-to-date as at January 10, 2020.”

Photo caption: Alhaji Rasheed Yusuf, Doyen of the market; Jude Chiemeka, Head, Trading Business Division, of the NSE; Oscar Onyema, the CEO; Bola Adeeko, Head, Shared Services Division; and Olumide Bolumole, Head, Listings Business Division, at the 2019 Market Recap and 2020 Outlook session in Lagos on Monday, 13 January 2020.

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