Kayode Tokede with News Agency
The Federal Government dominated capital raising at the fixed income segment of the Nigerian Stock Exchange (NSE) in 2020, raising over N2.36 trillion.
The Chief Executive Officer of NSE, Mr Oscar Onyema, said this at the 2020 market recap/2021 outlook on Tuesday in Lagos.
Onyema said the Federal Government accounted for about 92 per cent of total bond issuances on the NSE in a bid to finance fiscal and infrastructure deficits.
He said corporate organisations also leveraged the low yield environment to fund their expansion programmes and to pursue debt refinancing, raising a total of N192 billion in 2020.
Onyema said capital raising activities in the fixed income market increased significantly in 2020.
According to him, NSE’s bond market capitalisation rose by 35.52 per cent to N17.5 trillion from N12.92 trillion in 2019.
He said 2020 was, indeed, a historic year for global capital markets with several headwinds, including an unprecedented COVID-19 pandemic.
Onyema said the outbreak of the novel coronavirus and its rapid spread across the globe in the first quarter of 2020 triggered panic selling in global investors.
He said global capital markets lost 18 trillion dollars due to the pandemic in February and March 2020 alone.
“Several equity market indices lost up to 20 per cent of their value in the second week of March when the World Health Organisation declared COVID-19 a pandemic,” Onyema said.
On investor protection, he said the NSE paid compensations totaling N17.02 million to 49 investors/claimants who suffered pecuniary losses in 2020 through its Investor Protection Fund.
Onyema also said the NSE facilitated recoveries of shares worth N305.11 million for investors in 2020.
On the demutualisation programme of NSE, he said the Exchange was awaiting the approval of the Securities and Exchange Commission to finalise the exercise.
Onyema said when finalised, the demutualisation would make the exchange competitive in line with global standards.
He said the new entity would be listed by introduction to afford Nigerians the opportunity of being part owners.
Onyema explained that the NSE intended to use market norms and legal means to make the shares would be available for investors when listed.
Speaking on outlook for 2021, he said, “The global economy is projected to stabilize in 2021 and consolidate on growth made in the second half of 2020, albeit, below pre-pandemic levels.
“This is hinged on the distribution of a COVID-19 vaccine, persistent social distancing, rekindling economic activities, and increased consumer demand. The IMF projects the global economy will grow by 5.2per cent.
“The year has started on a positive note as the ASI has already returned 1.72per cent after nine trading sessions while on the global front, the US markets continues to look forward to a Biden administration as illustrated by a record-breaking Dow Jones performance in 2021 and the quick condemnation of the political turmoil in the United States.
“We expect the marginal reopening of businesses, normalization of the economy and revenue-diversification drive of the Nigerian government to elicit positive sentiments throughout the year. Our growth expectations should be noted with caution, as the recent second wave of COVID-19 in Nigeria and globally, may slowdown renewed social and economic activities.”