‘Nigeria still offers good value to investors’
The listing of major companies, particularly in the oil and gas, power, and telecoms sectors, on the Nigerian Stock Exchange (NSE), has remained a matter of intractable debate, with both sides offering strong arguments that appear to have stalemated the issue.
What role can market operators like you play to break the deadlock, and possibly encourage the targeted companies to quote on the nation’s bourse?
Our role here will be to act as intermediaries in order to ensure a win-win situation for both parties. The major benefits for listing includes assess to cheaper long term capital whether for expansion or for diversification purposes or even taking on new projects, brand enhancement/visibility, improved transparency, and wider inclusion.
Companies that have a good business model and a good track record of profitability over the years attract investors, who usually want to be part of such businesses.
One of the requirements for listing is that proper corporate governance must be in place. The operators can help persuade these companies to see the advantages inherent in listing on the NSE.
The challenge we now have to take on as market operators is identifying those companies, engaging them, and enlightening them on how the Nigerian stock market can both create more liquidity and value for their business.
I must mention however, that the operating environment is quite challenging at the moment for some of the businesses in those sectors. There has to be a really compelling story for the companies wishing to list on the exchange to get their desired level of liquidity.
The capital market is expected to play a major role in helping government finance a huge budget deficit this year. In your opinion, how well can the market support government’s financing efforts?
The federal government has always, and will continue, to tap into the fixed income market, as a way of providing funds to finance a budget deficit.
The market can also support the government’s financing efforts also by raising capital for infrastructural projects through primary issues, and public offerings.
We believe that the domestic pension funds and other investors have sufficient capacity to support government’s bond issues. Issuing project related bonds would also be an avenue to raise funds, and finance the budget deficit in our view. This will, however, be looked at from a contract sanctity perspective.
On the equity side of the capital market space, one way to fund the government deficit is by getting some of the properly run government agencies to list on the exchange.
Take for example, NNPC listing on the Exchange or perhaps the National Communications Commission (NCC). The power of sovereignty alone could be compelling enough for investors to invest, and hence for the government to source the liquidity it requires.
What advice do you have for someone who wishes to invest in Nigeria now?
My advice to investors is that they should consider valuation of the companies and take advantage of the undervalued stocks on the NSE.
Also, there are several quality stocks that pay good dividend and offer potential capital appreciation, which are attractive at the current levels. Diversification is also very important for investors to maintain a well-balanced portfolio.
Nigeria is officially out of recession, firstly, as an organisation, what are you doing to raise investors’ confidence, and collectively as a nation, what should be done to attract investors?
We will continue to engage investors on the value that Nigeria offers, especially the potential favorable returns that can be obtained on their investments.
The NSE growth in 2017 attests to this fact. The economy witnessed a significant improvement in the macro-economic fundamentals in 2017, as we recorded consistent monthly drop in inflation from 18.72 per cent in January 2017 to 16.01 per cent as at August 2017, due to base year effect.
We also had improvement in FX liquidity due to the new investors and Exporters (I&E) FX window introduced by Central Bank of Nigeria (CBN) during the year.
We saw significant improvement in volume of transactions executed in the equities market as well as the fixed income market. The intervention of the CBN in the capital market has helped in bringing Foreign Portfolio Investments (FPIs) into the country.
Stanbic IBTC has been involved with most of the big ticket financing deals in Nigeria in the last few years. What would you say is behind the confidence corporates and even the Federal Government reposes in Stanbic IBTC when it comes to debt or equity transactions?
I think the most important characteristics that have endeared us to our clients are our integrity, professionalism, and painstaking execution capabilities.
For us, it is important that clients derive utmost value first before any other consideration. The fact that we are supported by high quality research, dynamic sales team and have franchise capabilities across and beyond the continent due to our relationship with our parent company is a significant advantage.
All these have made us the first choice for clients, and have contributed largely to our company becoming Nigeria’s largest stockbroking firm in terms of transaction value for about a decade (2017 market share of 15 per cent), while also leading the transaction volume chart in 2013 and 2014.
We sustained this lead in January 2018 with market share of 16.98 per cent of the traded value on the bourse.
How significant was SISL’s operation and performance in 2017 to Stanbic IBTC Holdings Plc’s stellar performance recorded in 2017?
SISL as one of the major subsidiaries allows Stanbic IBTC Holdings to present end-to-end financial capabilities to the clients – a factor that has been an important consideration for them in passing their transactions through the group.
Data obtained from the NSE showed that 10 stockbroking firms led by SISL, traded 75.23 per cent of the total value of stocks exchanged between January and December 2017, and 53.24 per cent in terms of volume. Specifically, Stanbic IBTC Stockbrokers led in value terms, trading N403.491billion, which is 15.85 per cent. To what would you attribute this laudable achievement?
Our reputation for excellence is unrivalled, excellence in execution, research, sales, and in sourcing for block flows.
When clients know that you can deliver value to them as a company, they naturally gravitate towards you. We do not only seek to execute transactions, it is more important to build quality relationships with our clients and other stakeholders.
The West Africa Investors’ Conference 2018 was held last week, what were some of the key lessons gleaned from this year’s conference?
The 2018 West Africa Investors’ Conference, themed: “The pathway towards inclusive economic recovery’ held from February 26th to March 2nd, marked another very successful edition of the yearly conference.
One of the most important lessons is that Nigeria is very key to investors looking at investing in frontier markets, the potential that the country has to offer is not in doubt, it is just important for them that the right policies are put in place.
Another lesson is that companies that are perceived to be high quality organisations in terms of efficiency, corporate governance, effectiveness, returns, and client-centricity will always be of interest to investors.
In addition, opportunities are still available in the stock market especially for long-term investors as Nigeria still offers good value.
What goals and targets are you setting for yourself over the next two to three years?
We have consistently been the market leader in the stockbroking space over the last couple of years. Just like the brand we represent, we aspire to continue to be the market leader.
For us, it is important to rebuild retail investor confidence in the Nigerian equities markets; our goal is to continue to deploy technology to drive this.
We are committed to taking participation in the market to each household in Nigeria, because empirically it has been proven that the returns of the equities market over the long term is usually higher than the fixed income returns.
We will also continue to partner with the Securities and Exchange Commission (SEC), and the NSE to deliver on the goals and development of the market.
It is important for us also to continue to deploy the capabilities within the broader group and relationship with our parent company to introduce new products to the market.
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