Analysis Of NSE 2015 Results: Retail Investors Might Not Like What We Discovered
It must feel good to be a fat money grubbing council member or employee of the Nigerian Stock Exchange (NSE), who does nothing innovative to improve the financial architecture of your country, but still get paid.
According to the 2015 Annual report of the NSE, the group distributed N2.68 billion to employees and council members last year, never mind that there was not a single Initial Public Offering (IPO) on the exchange in 2015.
How about efforts to demutualise the exchange? Nada. Surely the NSE must have introduced simple vanilla derivative products offerings like Calls and Puts on equities? No luck there either.
While the group headline revenues fell to N7.8 billion from N9.1 billion in 2014, the NSE was still able to retain N1.85 bn in the business to augment reserves.
Reading through statements of the President of the NSE, Aigboje Aig-Imoukhuede and CEO Oscar Onyema, slapping themselves on the back for a job well done, one gets a sense that these guys really just don’t get it.
The Nairobi Securities Exchange (forget South Africa that would be too much to ask), demutualization in 2014 marked the beginning of a period of rapid innovation in East Africa’s capital markets.
The Nairobi Exchange has launched a derivatives exchange modeled on the Johannesburg Stock Exchange called NEXT NSE Derivatives Market.
The first instrument was to be a single-stock future, initially linked to the local currency, although going forward other currencies would be allowed.
Other securities will include interest rate and foreign exchange derivatives, commodity futures, currency futures and an equity index.
Ian Gachichio, research analyst at Nairobi based Kestrel Capital, said that currency and interest rate hedges are likely to be the most exciting instruments initially.
The Nairobi Exchange has also pioneered retail bond market investments for Kenyans by launching in conjuction with the Kenyan Treasury a KSh5bn ($55m) tax-free five-year infrastructure bond that can only be bought by mobile phone.
Minimum investment in the treasury’s M-Akiba bond will be KSh3000 ($33), down from the KSh50, 000 ($550) minimum of other treasury bonds, to encourage public participation.
So while Africa’s largest economy and the good old boys club that run the continents second largest stock exchange dilly dally on simple innovations, the train has already left the station in Kenya, and most other serious frontier and emerging markets worldwide such as Vietnam, Egypt, Pakistan, Argentina and UAE etc.
It would behoove Mr. Onyema, to settle down (now that he has gotten his second term as CEO) and actually work to get something concrete done to deepen Nigeria’s financial architecture.
Meanwhile (unrealistic) promises such as a $1 trillion market capitalization for the Nigerian bourse by 2016 (it’s here already, we bet Onyema didn’t think it will come that fast), should not be considered as part of his remit.
