FG, states borrowed N1.28tn from stock market in 2018

•Capital raised by firms falls by 39%

The Federal Government dominated capital raising activity last year as it borrowed a total of N1.16tn in a bid to finance fiscal and infrastructure deficits, while state governments raised N125.59bn in new debt capital.

The Chief Executive Officer, NSE, Mr Oscar Onyema, who disclosed this on Monday at the 2018 Market Recap and Outlook for 2019 in Lagos, said the market also witnessed the listing of a N100bn FGN Ijarah Sukuk designed to finance critical road infrastructure across the country.

Onyema said the amount of capital raised by corporate organisations fell by 39.09 per cent to N31.47bn in 2018.

He said foreign outflows from the stock market rose by 50.53 per cent to a total of N605.54bn from January to November 2018 compared to N402.26bn in the same period of 2017

“This trend highlights attenuated foreign participation due to a shift to higher-yielding assets with lower risks in developed countries, coupled with the impending political risks in the coming Nigerian elections,” he added.\Onyema stated that the Nigerian economy continued its path of recovery, growing by 1.81 per cent year-on-year in real terms as of the third quarter of 2018

He said the recovery was bolstered by increased stability in the macro environment as the Central Bank of Nigeria continued to pursue a relatively tight policy stance in an effort to curtail inflation, while holding the benchmark rate steady at 14 per cent and effectively maintaining liquidity and stability in the foreign exchange market during the year.

He noted that NSE equity market started the year on a high, with the All Share Index reaching a 10-year peak of 45,092.83 basis points in January 2018.

Onyema explained that, this was largely driven by the positive performance of the ASI in 2017, which emerged the best in Africa.

He said, “As we approached the second quarter, political risks, oil price volatility and rising global yields resulted in bearish sentiments that saw the ASI and equity market capitalisation fall by 17.81 per cent and 13.87 per cent to close at 31,430.50bps and N11.73tn, respectively.

“Turnover velocity inched up 0.91 percentage points to 10.25 per cent and likewise, the size of volumes traded in the period increased by 0.96 per cent to 101.43 billion with the financial services sector being responsible for the highest traded volume and value.”

Onyema noted that the market sentiments in the first half of 2019 would be driven by uncertainty in oil prices as well as the 2019 general elections.

He said volatility in the equities market in the first half of this year was anticipated with enhanced stability post-elections.

“We believe swift approval and implementation of the 2019 budget will have a positive impact on companies’ earnings as well as consumer spending. Therefore, we expect an uptick in market activity during the second half of 2019.”

The NSE boss added that to enhance listing prospects on the Exchange, the bourse had strengthened its government engagement efforts on privatisation and listing of state-owned enterprises.

He said the Exchange would take advantage of opportunities during the year, maintain collaborative efforts with public and private sector stakeholders to advocate for market-friendly policies and cater to infrastructure financing needs as well as other capital requirements necessary for sustainable economic growth.

“The Exchange intends to work with the private sector as well to catalyse the listing of more companies,” Onyema added.