Drop in ETF Capitalization Caused by Foreign Investors’ Exit, Says NGX boss

The Chief Executive Officer of the Nigerian Exchange Limited, Mr Temi Popoola, has revealed that the exit of foreign investors from the capital market led to a depreciation in the market capitalisation of Exchange Traded Funds listed on the exchange.

Popoola said this on Wednesday at a virtual conference themed ‘ETFs in the Nigerian capital market: Opportunities and challenges’.

He also said four new listings were ongoing.

In his opening remarks, the NGX CEO explained that despite its low market cap, the Exchange was leading the ETFs market in West Africa with a market capitalisation of N8.87bn ($19.25m).

He noted that the market was still in its nascent state, compared to the South African ETF market with a $7.11bn capitalisation.

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Popoola said, “There has been a dearth of new ETFs listings on the NGX in recent years, however, there are bright spots on the horizon with four new ETFs listings in the pipeline. It is incumbent to state that current macroeconomic challenges resulting in the exit of foreign investors, impacted the ETFs space which resulted in a sharp dip in the ETFs market Cap from 2020 highs of N24.5bn. We are hopeful that the policy tilt of the new administration would impact positively on our market.”

Also speaking at the event, the Executive Commissioner, Operations, Securities and Exchanges Commission, Mr Dayo Obisan, spoke on the challenges in the market.

Obisan expressed confidence in the ability of experts to proffer solutions.

He urged all stakeholders including the Fund Managers Association, NGX, and other institutional investors to extend the message of ETFs to deepen the market and make the asset class more vibrant, thereby driving growth in the capital market.

The Executive Director, Central Securities and Clearing System Plc, Adeyinka Shonekan, spoke on the CSCS’s developmental efforts in the ETFs market.

He explained how the CSCS was using technology to improve the onboarding of retail investors into ETFs.

The Manager, Business Development and Exchange Traded Products at the Johannesburg Stock Exchange, Adele Hattingh, also gave an overview of the South African ETFs market including why investors should consider investing in the asset class.