THE Nigerian Stock Exchange (NSE) says low yield environment caused by the coronavirus pandemic has positioned the equity market with domestic investors accounting for 60 per cent of market transactions.
The Chief Executive Officer of NSE, Oscar Onyema, gave the submission on Wednesday at a webinar organised by the NSE themed: ‘Capital Markets in a Pandemic’.
Onyema said low yield environment had positioned the equity markets as a credible alternative for domestic institutional and retail investors.
He said that, “surprisingly, domestic investors have risen to the occasion in sustaining the equities market performance.
“This year, domestic investors have accounted for almost 60 per cent of the trading activity compared to an average of 51 per cent in the past four years.
“Despite these economic headwinds, the NSE All-Share Index has returned month on month gains of 8.1 per cent and 9.8 per cent at the end of April and May, respectively.”
He explained that the pandemic had resulted in a decline in oil export earnings, which accounts for over 80 per cent of Nigeria’s export earnings, and remittances by Nigerians in the diaspora.
The CEO added: “Concurrently, foreign portfolio investor flight to safety has further intensified pressures on the nation’s foreign reserves and exchange rate.”
He said that liquidity in the foreign exchange window accessible to investors was also affected.
The CEO stressed the need for collaboration among exchanges, governments as well as use of technologies to remain resilient in the face of COVID-19 pandemic.
According to him, the pandemic has changed the way and manner things used to be.
Onyema noted: “Technology has long been a fundamental building block for growth in capital markets. Today, digitisation and advanced analytics offer tremendous new potential.
“The capital markets industry, today, finds itself in a transitional period where it can adapt to digital trends and technologies as well as innovate with new business models and products, services.
“At the NSE, we see asset digitalisation beginning to create a whole new user experience.
“The Exchange has continued to leverage on its cutting-edge technology and various innovative platforms to ensure continued trading and listing activities on its bourse.”
The Chief Executive Officer, World Federation of Exchanges, Nandini Sukumar said capital market investment would be safe with stakeholders’ collective efforts.
Sukumar said, “Stock exchanges exist to provide robust market structures that support issuers and investors, and we have seen this resilience amidst the COVID-19 pandemic.
“This resilience has not been an accident. Rather, we are seeing the result of a wide range of resources. Global exchanges have invested over a decade to prepare for a crisis such as this.”
The Chief Executive Officer, London Stock Exchange, Mr Nikil Rathi, said the pandemic would change investors’ way of investment as “we anticipate a change in the nature of investing.
“We have seen an increased focus on Environment, Social and Corporate governance (ESG) across asset classes, and this push is coming from investors who want to see the impact of their investments.”
Chief Executive Officer, Luxembourg Stock Exchange (LuxSE), Mr Robert Scharfe, assured investors of functional effective markets to curtail volatility.
Scharfe said over $20 billion social and sustainability bonds earmarked COVID-19 had been listed on LuxSE over the past three months.
According to him, there is a strong appetite from investors for such kinds of bonds in the recent time.
NSE Council President, Otunba Abimbola Ogunbanjo said the webinar deliberations “have addressed critical issues around the vulnerability and unique opportunities that the COVID-19 pandemic has created and how they are being – and will continue to be – addressed.
“It is my hope that we will continue to sustain these conversations around business innovation and partnerships even as countries gradually reopen and economies resume their activities.
“We have highlighted some of the steps that we can expect to see in the near future, including the development of alternative and sustainable asset classes; dependence on technology and digital innovation; commitment to customer centricity; and drive for collaboration across regions.
“With these, capital market players can rest assured that exchanges will continue to execute on their mandate to deliver a platform to raise and access capital even during a crisis.
“Certainly, we are living in unprecedented times, but from what we have heard here today, I believe that we can all leave with the confidence that there is a lot to look forward to in this ‘new normal’,” he said. (NAN)