Someone commented on a recent piece on the Nigerian Stock Exchange (NSE) which focused on why the bourse must find ways to boost liquidity. I had noted that the NSE is not working and must evolve to serve investors better through strategic partnerships with other exchanges. The comment, on LinkedIn is thus:
Ndubuisi Ekekwe I bet to differ. NSE isn’t struggling , if you look at the year to date return measure as ASI [All Share Index\, we are looking at above 30% . Technology companies however, haven’t really done well but generally, NSE isn’t struggling .
This is my response on why Nigerians should not be so happy with their exchange:
- Nigerian Stock Exchange total market cap is about N13 trillion (or $38 billion).
- But one company, Naspers, the owners of MultiChoice, in the Johannesburg Stock Exchange is worth $107 billion.
Now, tell me why we should not note that NSE is not working: our national stock exchange is not even half of the value of one single South African company. The case in NSE is pathetic. We are having liquidity issues and I do hope the management takes that as a challenge. We need action to bring investors back including retail investors that fled during the Great Recession. They need to see NSE as failing to be driven to fix it.
Yes, that we are adding 30% this year is irrelevant. While every major global exchange has recovered from the valleys of the Great Recession, the NSE is still trapped there. The last FBN IPO was priced in the region of N50 before the market collapsed around 2008. Today, FBN is still below N7. If you include the devaluation of the Naira, the real impact is that FBN is still off by N45. The same applies across board except GTBank.---