Years After - Oscar Onyeama - 100 Days in Charge of the NSE




July 22, 2011 / Proshare
“The road to market recovery lies with the exchange taking proactive measures towards reviving investors’ confidence in our market; not talk but deeds”.
This was the underlying observation we made at the beginning of the year in our market outlook report; just as the market was reacting warmly to proactive measures and some offensive ‘knight moves’ witnessed during the interim management’s tenure.
Confidence is liquidity; it remains the greater assets for an investor. This remained the panacea to flow of liquidity in the market. Currently, the market is on the slope, trading in the red zone with YTD performance of -4.94%.
It would appear that the market  reacted more swiftly to positive actions than ‘paper plans and multiple or sometimes conflicting regulator driven agendas’ - an indication that our bourse needs active measures that are market-led for any possible turnaround to occur.
A Flash-back on the NSE Interim Management Team
Activities at the Nigerian Stock Exchange (NSE) was tumultuous despite attempts by the Emmanuel Ikhazoboh led interim administration to address internal dislocations created by the take-over and other fundamental issues responsible for the unstable trend.
The theatre created by the media led discussions taken place during the period before the take-over played no small part in delivering a negative market performance as the ASI dipped by -6.24% and continued the downward trend on reduced momentum unabatedly as ASI dipped further in the 100 days before the interim team came on board.
Further analysis revealed that the NSE crisis had direct negative impact on investors’ confidence as market experienced unrelenting selling activities between August 5th and September 27th 2010, losing N792.47 billion with corresponding outflow of liquidity within 36 trading sessions. This situation was exacerbated by the ‘unsettled nature’ of the banking sector.
Cumulatively, the market shed -4.16% in the eight months (August 6th 2010 to April 4th 2011) during the tenure of the interim management at NSE. This puts NSE YTD performance at -1.40% before the new NSE CEO resumed duty.
Nevertheless, there were brilliant and impressive measures taken in the short time of interim administration tenure – especially towards good corporate governance practices as part of strategies to revive the depressed investors’ confidence. The way a few instances of ‘tokenism’ deployed by the administration, notably in its inability to follow through on compliance monitoring and enforcement of rules/sanctions.  
Market expectations as investors await Onyeama to resume  
The Nigerian bourse was presented by the regulators as one with an inability to self regulate and beset with problems of corporate governance, routine market infractions and falling professional decorum – all signposts of what eroded market confidence. Though the jury is still out on this characterisation, stakeholders collectively agree that something fundamental is wrong as market defied all prescribed measures by the regulator led team with the exception of the reduced sell-off noticed during the period. 
The yearning for a market-led turnaround team therefore increased expectations that most of the seemingly complex, political and operational issues holding the exchange back will be dealt with in business like manner. 
Yet, a number of legal issues lurked in the background around the conversion of the exchange from a company limited by guarantee now acting like a limited liability concern in its governance structure.
Onyeama Resumes: the talks, the Plans and the reality
The New NSE Chief Executive, Oscar Onyeama resumed officially, eight months after the August 5, 2010 putsch of Prof. Ndi Okereke-Onyiuke, and thus became the 4th Chief Executive of the Nigerian Stock Exchange. Upon Resumption, he promised to rekindle and revive the depressed market confidence and the falling fortune of exchange. According to him, part of his plans centred on creating a fair and level playing field for all the stakeholders - as a strategy, this is aimed at attracting various players to the market. He promised to significantly raise the market capitalization of the bourse to $1 trillion (N157 trillion) within five years.
He outlined the following as part of his focus: listing development; market development; product development and strategic alliances as a move to position the Nigerian Stock Exchange as a gateway to African frontier market; and a leading exchange for capital formation. On the operational side, he aims to take necessary steps at enhancing operational efficiency, technology and supporting infrastructure, capacity building and the demutualization of The Exchange. 
In addition to his plans, he seeks to deepen the market with Index/Exchange Traded Funds, Options and Financial Futures product lines, bringing the tradable assets classes to five with five years while trying to woo more multinationals and big indigenous companies to be listed on the bourse. 
This ‘shopping list’ of deliverables was thus developed into a matrix for which clear and measurable milestones as well as the sequencing will be required to guide necessary appraisal. 
The absence of the information notwithstanding, we conducted an analysis of market trends in the last hundred days under close watch and surprisingly, our tracking analysis revealed that the market confidence remained weak; below expectation as would have been expected giving the brilliant initiatives in the pipeline. YTD performance stood at -4.94% while ASI traded below the nine months support level at the end of his first 100 trading days. 
It must be noted however that his first 100 days was during an election season with an attendant lull in forming a government long after the election – thus impacting economic and business activities and contributing immensely to the depressed state of market.
The 100 Days Before - Waning of bearish momentum witnessed
The analysis of market activities during this period (100days before the new NSE CEO resumed) revealed a gradual and consistent fall in bearish trend, signifying possible turnaround as ASI closed with marginal loss of -0.01% with a corresponding sharp drop in bearish volume, trading marginally below its 15days & 45days volume moving average.
Also, the key benchmark indices closed bearish at 24,752.04 trading below 20days and 50days moving averages of 24,954.54 and 25,992.43 respectively to buttress the negative breadth observed.
More so, the advance and decline indicator which measures market breadth revealed a negative outlook, buttressed by significant drop in the liquidity level at the tail end of the period as revealed by technical analysis.
The trend in volume traded revealed low activities as volume traded below its 15days and 45days moving averages most of the time while liquidity level appeared low as well to close weak  with an average of 12.70%.
The Volume and Value Performance
Market traded with average volume and value of 145.14 million units and N1.20 billion during the period under review. In the period, banking sector remained most active sector while Zenith Bank Plc recorded highest volume of 2.93 billion units on average of 45.87 million, followed by Transcorp Plc 2.88 million units with average of 44.31 million units.
The 100 Days After - Market is trading below 9months low on increased bearish momentum.
The market experienced increased bearish activities as ASI dipped below nine months low with -3.26% losses, trading below short and mid-long term moving averages of 24,749.27 and 25,300.70 to settle at 23,863.07. This technically suggests intense bearish outlook in both short and long term.
Indeed, the average market value traded within the period reviewed dropped by -21.80% to close at N938.87 million as against average of N1.20 billion recorded in the 100days before the new NSE CEO resumed. This could be traced to low bargain enthusiasm - a reflection of the low risk appetite and weak market confidence. The average volume traded witnessed a marginal growth of 0.25% to buttress the above position.  
Though, there was no huge sell-off; the market lacked bargain strength to move the trend upward as volume analysis technically suggests in the below chart. 
Relating ‘100 days after’ in figures...
Conversely, we observed an increase in liquidity level to close with 15.16% above average of 12.70% recorded in the previous period (100 days before). This could be traced to value investing tendency witnessed towards big CAP stocks during the period, which still buttressed the low risk appetite as mentioned above.
The volume traded closed weak below its 15days and 45days moving averages due to low enthusiasm and consequent pessimistic trading witnessed during the period. Meanwhile, improved liquidity was observed with average of 15.16% due to value investing approach towards blue chip and big CAP stocks, buttresing the low risk appetite.
Volume and Value details 
The total value traded dipped by -20.94% in the face of slight improvement observed in liquidity level while total volume traded experienced a marginal growth of 1.34%- an indication that there was no huge sell-off during the bearish period as noted above. 
The volume traded closed at 26.91 billion units with average volume of 145.49 million units, recording 0.25% of average volume growth. The banking sector sustained the leading position as most active sector while Transcorp Plc came from behind to close as most active stock, displacing Zenith bank Plc which dropped to second position.
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