The Nigerian Stock Exchange has revealed plans to reduce the compliance burden on listed firms. The Chief Executive Officer, NSE, Mr Oscar Onyema, while speaking at the 2018 Market Recap and Outlook for 2019 in Lagos on Monday, said listing activity remained relatively low in 2018, while equity turnover remained relatively stable, marginally declining by 5.45 per cent to N1.20tn.
Onyema noted that last year, only one firm was listed on the Exchange, while four firms delisted. He said the delisted firms were struggling to comply with post-listing requirements, and had to exit the Exchange. Onyema said, “We are trying to make sure that we continue to give listed companies value. We recently sent letters to all chief executive officers of firms and encouraged them to engage with us.
“So, we cannot stop a company from leaving if they feel their listing on the Exchange is not in alignment with their business goals. However, we are mindful of the burden of compliance and we are trying to reduce it. We are not interested in issuing fines.”
He stated that the companies that were recently removed from the Corporate Governance Index did not meet the requirements, adding that the stockbroking firms that were expelled were either inactive or had their licences revoked. Onyema stated that the NSE equity market started the year on a high note, with the All-Share Index reaching 10-year peak of 45,092.83 basis points in January.
He said 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.”
“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.”
Onyema stated that to enhance listing prospects on the Exchange, the NSE had strengthened its government engagement efforts on privatisation and listing of state-owned enterprises. “The Exchange intends to work with the private sector as well to catalyse the listing of more companies,” he added.