Low Fixed Income Yields, Improved Economic Conditions and Renewed Optimism Propelled 2020 Bullish Run – Onyema
Mr. Oscar N. Onyema, OON, the Chief Executive Officer, Nigerian Stock Exchange (NSE), on Tuesday, identified some of the factors responsible for 2020 end of the year bullish run during his presentation at the annual 2020 Market Recap and 2021 Outlook.
The CEO explained that while COVID-19 plunged stock prices due to huge sell-off in the first quarter, renewed investor optimism following series of adjustments made by the Federal Government to arrest the situation in the second half of the year bolstered economic conditions and stimulate the 50.3 percent gain recorded for the year 2020 by the Nigerian Stock Exchange.
Mr. Onyema stated, “The year 2020 was indeed a historic one for global capital markets. Facing buffeting headwinds, world markets saw sharp swings and steep losses but largely remained resilient and orderly amid rising uncertainty. For The Exchange, renewed investor optimism coupled with improved economic conditions and low fixed income yields propelled a year-end bull run. Of 93 global equity indices tracked by Bloomberg, the NSE All-Share Index (ASI) emerged as the best-performing index in the world, surpassing the S&P 500 (+16.26%), Dow Jones Industrial Index (+7.25%), and other global and African market indexes, to post a one-year return of +50.03%.”
Explaining the negative impact of the COVID-19 pandemic, he said the global capital market lost USD 18 trillion between February and March 2020 alone. However, global markets rebounded to the pre-pandemic level in June 2020, largely due to stimulus packages, monetary policy actions and public health responses from the world governments and economic actors.
On product performance, he said the Nigerian equities market recovered following the “formal declaration of the U.S president-elect, unattractive fixed income yields, and better-than-expected corporate earnings, the NSE ASI recovered from Q1’20, to close the year at 40,270.72 (+50.03%) and erase losses of -14.90% recorded in 2019. During its remarkable year-end run, the ASI gained 6.23% in a single trading session which triggered a 30-minute halt of trading on all stocks for the first time since the NSE Circuit Breaker was introduced in 2016 to safeguard market integrity in periods of extraordinary volatility.”
“At the close of the year, the NSE’s equity market capitalization was up by 62.42%, from N12.97 trillion in 2019 to N21.06 trillion in 2020 while market turnover saw an uptick of 7.25%, from N0.96Tn in 2019 to N1.03Tn in 2020. Although Initial Public Offering activity was mute, the value of supplementary issues increased dramatically from 2019, rising by 851.37% to N1.42 trillion, from N148.77 billion. Also noteworthy is that for the second consecutive year, equity market transactions were dominated by domestic investors who accounted for 65.28% of market turnover by value (Retail: 44.98%; Institutional: 55.02%) while foreign portfolio investors accounted for 34.72%.
“Capital-raising activities in the fixed income market increased significantly in 2020. The NSE’s bond market capitalization rose by 35.52% from N12.92 trillion in 2019 to N17.50 trillion. Continuing the trend in recent years, the Federal Government of Nigeria dominated issuances, raising over N2.36 trillion which comprised ~92% of total bond issuances. Corporates also leveraged the low yield environment to fund expansion objectives and pursue debt refinancing, raising a total of N192 billion.”
AfDB Approves $400,000 Grant for Securities and Exchange Commission of Nigeria to Support Capital Markets Development
The African Development Bank Group today signed a $400,000 grant agreement with the Securities and Exchange Commission of Nigeria to strengthen securities market regulation and broaden market instruments.
The funds will go towards strengthening the risk-based supervision framework, regulation of derivatives and green bonds, and build capacity for green finance. The grant will be sourced from the Capital Markets Development Trust Fund, a multi-donor fund administered by the Bank.
“This collaboration further underscores our mutual goal to grow our markets and create viable avenues for sustainable economic development for Nigeria and the region,” said Lamido Yuguda, Director General of the Securities and Exchange Commission at the virtual signing ceremony.
The grant is aligned with the priorities of the Bank’s Country Strategy for Nigeria, which envisages measures to stimulate capital market development to unlock financial resources for productive sector investments, infrastructure development and private sector growth.
Lamin Barrow, Senior Director of the Bank’s Nigeria Country Department, noted the urgency of the implementation of the project.
“At a time when countries are striving to build back better from the ravages of the COVID-19 pandemic, improvement of the enabling regulatory and supervision framework will boost domestic resource mobilisation efforts and leverage private sector contributions to achieve a greener, more environmentally sustainable and inclusive post-pandemic recovery,” Barrow said.
Oscar Onyema, Chief Executive Officer of the Nigerian Stock Exchange, thanked the African Development Bank Group and the Securities and Exchange Commission “for this historic event and partnership, to build in-house capacity at SEC, the Nigerian Stock Exchange, issuers and investors in the sustainable finance space, which will help to meet climate finance commitments in Nigeria.”
The project will support the implementation of the SEC’s Nigeria Capital Market Master Plan 2015-2025 and its vision to position Nigeria’s capital market as a competitive and attractive destination for portfolio investments.
Ardova Plc Profit After Tax Drops by 47.3 Percent to N2.06 Billion in 2020
Ardova Plc Posts N2.06 Billion Profit After Tax in 2020
Ardova Plc, an indigenous energy group headquartered in Lagos, has declared N2.063 billion for the year ended December 31, 2020.
In the audited financial statements released on Thursday through the Nigerian Stock Exchange (NSE), the amount was 47.3 percent below the N3.915 billion posted in the same period of 2019.
The revenue of the energy company grew from N179.550 billion in 2019 to N181.664 billion in 2020. While the cost of sales inched slightly higher from N165.269 billion achieved in 2019 to N169.558 billion in 2020.
Gross profit stood at N12.107 billion, up from N11.282 billion recorded in 2019.
Profit before income tax moderated from N4.654 billion in 2019 to N3.199 billion in 2020.
Ardova posted N2.063 billion profit after tax in the period under review, down from N3.915 billion attained in 2019.
The company’s total assets stood at N62.443 billion as of December 31, 2020, up from N47.019 billion in 2019.
Nestle S.A Increases Stake in Nestle Nigeria, Invests Another N3 Billion
Nestle S.A Invests Another N2.99 Billion in Nestle Nigeria
A Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland, Nestle S.A has invested another N2.922 billion in Nestle Nigeria, according to the latest disclosure statement filed with the Nigerian Stock Exchange.
Nestle S.A, the majority shareholder in Nestle Nigeria, has been increasing its stake in Nestle Nigeria in the last two years.
On March 02, Nestle S.A purchased 1,980,370 shares at N1,348.94 a unit while on March 03, another 186,277 shares were acquired at N1,349.74 per share.
Bringing the total shares purchased to 2,166,647 at an average price of N1,349 per share. Meaning, Nestle S.A invested another N2.922 billion in Nestle Nigeria. See the details below.
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