The Nigerian Exchange Limited (NGX) has said the capital market authority hopes the policies of Bola Tinubu’s administration will impact positively on the Exchange Traded Funds (ETFs) listings which have depreciated under President Muhammadu Buhari.
Exchange Traded Funds are similar to mutual fund investment. It is a pool of investments from various investors who will be handed a bundle of assets they can buy and sell during market hours.
According to the Chief Executive Officer of NGX, Temi Popoola, in a statement released yesterday, the market valuation of ETFs dropped significantly in the last three years.
The Exchange Traded Funds market valuation has depreciated from N24.5 billion in 2020 to trading around N8.62 billion as of Tuesday.
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The decline in ETFs’ market capitalisation is driven by the mass exit of foreign investors who are discouraged from investing in the capital market due to the current macro-economic challenges.
With Buhari ending his tenure on May 29, 2023, and the administration of the president-elect, Tinubu, commencing, Popoola believes a policy tilt could make the ETFs attractive again to investors.
“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 macro-economic 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,” Popoola said in the report published on NGX.
Nigeria has the highest ETFs capitalisation in the sub-continent, however, the N8.62 billion ($19 million) is far behind South Africa’s ETFs market capitalisation of $7.11 billion.
