National Mirror www.nationalmirroronline.net
Capital Market
Wednesday, January 1, 2014
45
Equities gain 47.2% in 2013 JOHNSON OKANLAWON
I
nvestors in equities on the Nigerian Stock Exchange have cause for better smile this year, as their investments yielded higher returns compared to the preceding year. In the year, the benchmark index of equities gained 47.2 per cent as at yesterday, December 31, 2013, compared to 35.5 per cent recorded in the same period of 2012. Market capitalisation rose N4.352trn to close at N13.226trn, compared to N2.341trn recorded in 2012 to close at N8.874trn, from the opening figure of N6.533trn. On the sectorial indices, the Oil and Gas Index recorded the highest increase of 122.26 per cent for the year to close at 339.88 points, from 152.92 poinst at which it opened the year.
Also, Lotus Islamic Index followed with 61.84 per cent to close at 2,546.59 points, from 1,769.07 points, while the NSE 30-Index appreciated 42.7 per cent to close at 1,907.17 points, from 1,336.07 points it opened the year. The Banking Index and the Consumer Goods Index gained 31.86 per cent and 31.14 per cent to close at 447.84 and 1,100.25 points respectively. The Insurance Index recorded the least gain with 29.02 per cent to close at 152.87 points, from 118.49 points in the beginning of the year. Among various initiatives that drove the market was the introduction of market making, which is aimed to deepen the Nigerian capital market and make it the gateway to Africa capital markets. Apart from restructuring various sectors, the Ex-
change has also reviewed its listing requirements to encourage new listings and introduced new products. The Chief Executive Officer of Financial Derivatives Limited, Mr. Bismark Rewane noted that the market as it is today is moving towards efficiency, saying that a market is first and foremost efficient before it becomes sophisticated. In the course of the year, the market witnessed the inauguration of two overthe-counter markets – the NASD OTC and FMDQ OTC – among other initiatives. According to Rewane, all of them were aimed at increasing liquidity in the market and promoting efficiency. “Now, all of these features of over-the-counter markets and others are in place to ensure that there is a higher turnover and better mobilisation of sav-
ings,” he said. He explained that some of the notable developments that have helped the market to evolve include the fact that it is better regulated and participants are more willing to provide needed data and information. The first thing to note, he said, was that the market is well-regulated; the Securities and Exchange Commission is doing a good job, “so we have had very limited reports of abuse. Also, participants are now compliant in terms of releasing data and information,” he said. Rewane, however, said the market was still price inefficient. “In essence, the pricing mechanism of the market is still inefficient, not because the market is inefficient; it is just because the structure of the market is evolving towards perfection,” he noted.
No going back on new capital base –SEC JOHNSON OKANLAWON
F
ollowing reactions from operators in the Nigerian capital market on the new minimum capital requirements, the Securities and Exchange Commission yesterday reaffirmed that the decision was the outcome of extensive consultations with stakeholders within and beyond the Nigerian capital market. Under the new regime, broker/dealer is to raise its capital base to N300m from the current N70m, a broker to N200m from N40m, while that of dealer was increased to N100m from N30m. A statement from the SEC said that the new capital regime is the outcome
of a process which commenced in 2010 with the setting up of a technical committee chaired by a former Executive Commissioner, Operations at the SEC. The statement explained that the committee featured representatives of the capital market industry trade groups such as the Association of Stock – broking Houses of Nigeria, ASHON and the Chartered Institute of Stock – brokers, CIS as active members. It said, “The new minimum capital regime which was recently announced on the basis of a September 2013 SEC Board decision was a finalisation of the work of that industry – wide committee. “It bears reiterating that an enhanced capital base for the operators in the Ni-
gerian capital markets is long overdue. It is an inevitable logical step in the industry reform effort being led by the SEC and which has the buy – in of all industry stakeholders.” According to the SEC, the reform has led to unprecedented market recovery with market capitalisation and the All Share Index attaining and exceeding the pre 2008 peak global financial meltdown figures, thereby positioning Nigeria within the top 10 bracket of the world’s best performing capital markets for the third year running. “This recovery process can only be sustained with the strengthening of market operators through enhanced capital, better technological infrastructure, qualitative human capi-
tal, improved operational set up which provides for seamless and efficient linkage between the front, middle and rear offices as well as a corporate governance structure which moderates the often pernicious link between ownership and control. “The new capital requirement is inspired by current international best practice which requires that operators hold capital which is commensurate with the size of risk which they bear in the market place. Indeed the new capital regime, when depreciation in the value of the naira is factored in, merely takes the Nigerian capital market back to the 2004 baseline capital situation,” the statement added.
World indexes finish vintage year, more seen in 2014
U
nited States stocks were set to close 2013 at record levels, with world equity markets close to six-year peaks yesterday, while benchmark bond yields were poised for their first annual rise since 2009 in anticipation of stronger global growth in 2014. Ultra-easy monetary policies and an improving economic outlook led to a stellar year for stocks. Equity strategists see the
gains continuing into 2014 as economic growth improves even as the Federal Reserve steadily trims its bond-buying stimulus. “Things still look pretty solid at the end of 2013, and 2014 will be a better year with less fiscal drag,” said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh. “The other thing is a better global economy. Exports will be better. Europe is coming out of recession.
Growth in Asia is expected to re-accelerate.” Wall Street was on track for its best year since 1997 with a 29 per cent gain. More than 450 of the stocks in the S&P 500 are set to end the year higher, the most since S&P started collecting that data in 1980. Japan’s Nikkei finance/ markets/index ended up 56.7 per cent and European shares gained 16 per cent. Reuters polls show European stocks are expected
to hit new highs in 2014, while Chinese, US and other major stock markets are also seen posting solid gains. By contrast, the Barclays US Aggregate Index of investment grade bonds is on track for its worst year since 1994, as interest rates rose in anticipation of reduced Fed stimulus and higher-yielding stocks attracted more investment flows.
Source: NSE
Source: FMDA
Market indicators All-Share Index 41,329.19 points Market capitalisation 13.22 trillion
Stock Updates GAINERS COMPANY
OPENING
CLOSING
CHANGE
OANDO
22.00
24.25
2.25
% CHANGE 10.23
ZENITHBANK
24.87
27.40
2.53
10.17
AFRIPRUD
3.02
3.32
0.30
9.93
NEIMETH
1.15
1.26
0.11
9.57
UBCAP
1.89
2.07
0.18
9.52
MAYBAKER
2.24
2.45
0.21
9.38
CCNN
10.78
11.75
0.97
9.00
NEM
0.69
0.75
0.06
8.70
DANGFLOUR
9.50
10.25
0.75
7.89
UBA
8.34
8.90
0.56
6.71
CHANGE
% CHANGE
LOSERS COMPANY
OPENING
CLOSING
FO
108.30
97.75
-10.55
-9.74
LEARNAFRCA
2.07
1.97
-0.10
-4.83
AIICO
0.88
0.84
-0.04
-4.55
JOHNHOLT
1.17
1.12
-0.05
-4.27
LIVESTOCK
4.45
4.30
-0.15
-3.37
TRANSCORP
4.50
4.35
-0.15
-3.33
CADBURY
60.88
59.01
-1.87
-3.07
DIAMONDBNK
7.50
7.35
-0.15
-2.00
MANSARD
2.50
2.45
-0.05
-2.00
OKOMUOIL
44.79
44.00
-0.79
-1.76
Primary Market Auction TENOR
AMOUNT (N’mn)
RATE (%)
DATE
91-Day
22,057.31
11.50
07-Nov-13
182-Day
30,000.00
11.59
07-Nov-13
182-Day
47,786.39
13.05
07-Nov-13
Open Market Operations TENOR
AMOUNT (N’mn)
RATE (%)
DATE
178-Day
86,709.13
12.35
07-Nov-13
175-Day
95,368.69
12.35
07-Nov-13
-
-
-
-
Wholesale Dutch Auction System AMOUNT OFFERED
MARKET DEMAND
AMOUNT SOLD
DATE
$350m
N/A
$343m
04-Nov-13
$400m
N/A
$399m
30-Oct-13