The Nigerian Stock Exchange (NSE) to play its role mre actively in rejuvenating the nation’s economy, the Federal Government must play its role in ensuring that players in critical sectors are represented on the bourse.
Experts at FBN Capital Limited, in a note on the economy, want the Federal Government to go a step further by attaching a listing condition to ensure that those who win bid rounds for the nation’s oil blocs must also list them on the bourse. This is expected to further broaden the NSE’s categorization away by including the upstream petroleum sector.
Already, they noted, “an opportunity presents itself with the proposed restructuring of the Nigerian National Petroleum Corporation.
“The new administration plans to sell off parts of the national giant such as gas operations and a stake in the four refineries.”
Also, the advised “whenever the government auctions slots in the broadband infrastructure, or acreage under a new oil bidding round, it could also apply a listing condition.”
The non-representation of some major sectors, they reasoned, have left several gaps waiting to be filled, following which three segments currently account for 88% of total market capitalisation.
At the moment they added, there are no oil producers, just as no significant players in the services industry has pledged to list some shares on the NSE.
“New listings are critical to enhancing the depth and marketability of the offer on the NSE,” FBN Capital explained, noting the decision of MTN, Nigeria’s largest GSM service provider and the nation’s largest company, to list its shares.
These, and a few new listings in the next 18 to 24 months from the upstream oil, consumer goods and industrial goods segments, are expected to significantly boost the NSE’s outlook.
“Beyond private sector government transactions, the NSE is in the process of demutualising itself, and has already appointed financial advisors and legal consultants.
“In Nairobi local stockbrokers sold 66m shares in 2014. Their stake was thereby reduced to 56% and will be trimmed to below 40% in 2017,” the note added.
“Looking ahead, the exchange will be well positioned for the upturn in the economy. Securities lending has the potential to boost the liquidity and evolution of the market. The exchange itself is the driving force in clearing the obstacles to its launch. It is also alone in sub-Saharan Africa, outside South Africa, in having admitted exchange-traded funds for listing. Three more were listed in 2015.”