NGX Shares Hits N100 Amid Renewed Governance, Other Factors

Kayode Tokede

The shares of Nigerian Exchange Group (NGX) hit the N100 per share mark last week Friday,, following a 43 per cent rally year-to-date, dwarfing the performance of the overall market and all benchmarks.

The shares of the Group, which was originally listed at N27, after the  demutualization of the premier Nigerian Stock Exchange (NSE) in 2021 was initially a “poster child” for many investors and the legacy shareholders, as it plunged quickly to N17 by 2023, casting doubt on the efficacy of the demutualisation of the Bourse and loss of value to investors.

However, with the reinvigorated governance of the Board, renewed  innovation and diligence of the executive management, NGX Group has become the new bride for both institutional and retail investors, leading gainers board and delivering alpha returns to shareholders.

The Executive Vice Chairman of Fund Matrix, also a broker/dealer firm, Mr. Yadinma Onwu noted that NGX shares worth a lot more and the performance of the stock over the past two years is a testament to the intrinsic value of the Group.

“The Board and Management of the NGX have been diligent in their leadership, with a host of innovations. This has helped to position the Exchange appropriately to harness the benefits of ongoing economic reforms  and renewed appetite of both local and foreign investors for Naira-denominated assets.

“Even as the shares plunged after demutualisation, I remained upbeat on the intrinsic value of the shares and I am more than ever optimistic that with consistent and reliable leadership, the NGX Group would continue to deliver exceptional returns to shareholders.

“It’s a rare infrastructure in the financial market and being a shareholder of such entity affords exposure to the growth prospect of the Nigerian financial market, as the country increasingly harness latent and new opportunities to deepen market penetration and broader financial inclusion,” he saiid.

The Chief Executive of 4Stone Capital, Dr. Lizzie Kings-Wali echoed similar sentiment on the valuation of the shares of the NGX and the role of regulation, Board governance and  effective leadership in actualising the potential of a financial market infrastructure such as the NGX Group.

In her view, she noted; “the NGX Group is a critical utility for the Nigerian financial market so I would credit the performance of the shares to macro reforms which is deepening market penetration and stimulating investor confidence in the Nigerian financial system. Beyond the reforms, the leadership of the Securities and Exchange Commission and the Board of NGX have been in sync over the past 2years on capital market reforms, the latest being the shortening of settlement cycle in the equity market and new capital requirement for operators. “These reforms coupled with diligent execution of the management ideally reinforce the confidence of investors in the inherent value of NGX shares as an investment asset. The shares rallied strongly from barely N17 two years ago to N100. This performance further justifies the superiority of equity returns, over the medium to long term, especially for savvy investors who are able to identify undervalued stocks. Nonetheless, the fact that a stock is undervalued may not necessarily mean its a good investment, one must be positive on the leadership of the company, as this would determine whether or not the company would realize its potentials.”

The performance of the NGX is undoubtedly a big-win for the Board, led by Alhaji Umaru Kwairanga, a seasoned finance professional and fellow of the Chartered Institute of Stockbrokers, who is a veteran broker. Most stockbrokers acknowledge his deep understanding of the capital market and positive leadership. He is renowned for his market-wide consultation of stakeholders and effective support to the executive management of the NGX. Notably, Temi Popoola, the Group Managing Director of NGX also has extensive global and local experience, thus reflecting the innovation and execution discipline of the Exchange over the past two years.

Following the demutualisation, VFD Group Plc and Cardinalstone Partners Limited emerged as the leading shareholders  with representation on the Board, refining the governance of the institution and repositioning the Group for effectiveness and efficiency in driving capital market growth.   Again, this speaks to the benefit of demutualisation, with shareholders driving performance of the Group through Board oversight and support to the management. Against all odds and the prevailing  corporate culture of locking out shareholders’ representation of the Board, Alhaji Umaru Kwairanga championed the governance reform that led to the election of Nonso Okpala and Mohammed Garuba in a governance change which shifted the corporate culture of the NGX Group and injected new energy and passion for results. These younger professionals infused a new goal-oriented culture of innovation and market-oriented approach to NGX rules and operations.

Analysts say more success demands greater success and the new challenge for the NGX Board and Management remains their ability to consolidate on the progress made thus far both in terms of value creation for shareholders and market-wide reforms for deepening capital market penetration. Clearly, investors are the winners of the new energy and value creation drive in the NGX.