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Expert x-rays role of capital markets in sustainability, growth, development of any Economy

The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, has said that capital markets are critical to sustainability of growth and development in an Economy.Speaking at the fifth Lagos and London Capital Markets in Partnership Conference on Friday in Lagos, Onyema stated that one of the things that Nigeria (and Africa) needs to sustain its growth, is a solid and vibrant capital market ecosystem that will attract investment and unlock the potential that exists in the economy.

He said that the theme of this conference – “Attracting Global capital to drive Nigeria’s Economic Reforms and sustainable Growth” – was quite topical for Nigeria at this time.

“As the Government grapples with the task of articulating a clear economic blue print for the short to midterm within which credible fiscal and monetary policies can emerge, the reality of the need to leverage and embrace the globalisation of economies and financial markets becomes clearer,” he said.

He disclosed that on Thursday, May 31, 2018, the NSE ASI witnessed a reversal of all the gains made in 2018 and is currently down 0.36%.

“Since the market is a leading indicator, we cannot take our eyes off the ball and must continue to press for positive catalysts that will propel the economy to new heights,” he said.

According to him, the global outlook for 2018 remains positive on the basis of resilience in the US, economic stability in Europe and significant increases in market activity of emerging economies.

He noted that the African Equity Capital Markets (ECM) recorded an increase in volume and value in 2017 with 49 percent growth in total ECM transaction value and 17 percent growth in Initial Public Offers (IPO) volumes from the 2016 four-year low.

He said that market recovery was largely driven by South Africa, with contribution from Egypt, Tunisia and renewed listing activity in Namibia.

Onyema disclosed that primary markets activities on the Nigerian bourse in 2018 has not continued the pace of resurgence of 2017, although the pipeline remains strong.

He observed that the 2017 Primary markets activities were dominated mostly by supplementary offers, listings by introduction, debt issuances, mergers and divestments.

“The market recorded an uptick as Equity market capitalization grew by 42.12% in 2017 closing the year at N13.62tn compared to N9.54tn in 2016. With these feat, The NSE emerged the star of Sub-Saharan Africa markets and one of the top three best performing World Federation of Exchanges’ markets of 2017 globally,” he said.

According to him, the Nigerian economy exited recession with a marginal growth of 0.83% in 2017 and is expected to grow by 2.5% in 2018 based on the World Bank’s projections.

He noted that this optimistic outlook is also evident in the NSE’s trading activities with cumulative transactions from January to April increasing by 114.22% from N509.38 billion recorded in 2017 to N1.091 trillion in 2018.

He explained that the NSE collaboration with the London Stock Exchange was deliberate and strategic,

“It is geared at encouraging seamless cross-border access between our Capital Markets to ultimately drive deeper capital markets that enable capital formation for Businesses and Governments; create larger liquidity pools and greater competitiveness for our investors; and enhance capacity and promote diversity of investment products to meet the needs of a wide range of investors and issuers.

“This is evidenced by the FGN Sovereign FX denominated $1 billion Eurobond on The Nigerian Stock Exchange and London Stock Exchange recently, and a strong pipeline of corporate Eurobonds,” he said.

According to Onyema, creating and sustaining the growth trajectory of the exchanges, capital markets, financial markets, economies and the continent as a whole, require “a strong commitment from each and every one of us here today”.

He called on the participants to use the opportunity to partner with each other and further unlock the growth potential and advance the development of “our financial and capital markets”.

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