Ogungbesan: Diversification Important to Maintaining Balanced Portfolio
Chief Executive, Stanbic IBTC Stockbrokers Limited, Mrs. Titi Ogungbesan spoke to Goddy Egene on the firm’s leading performance on the Nigerian Stock Exchange, the need to sustain investor confidence and the role of market operators in attracting investor
The federal government has always and will continue to tap into the fixed income market as a way of providing funds and finances to fund a budget deficit. We believe that the domestic pension funds and other investors have sufficient capacity to support government’s bond issues. Issuing project related bonds would also be an avenue to raise funds to plug the budget deficit in our
Stanbic IBTC has been involved with most of the big ticket financing deals in Nigeria in the last few years. What would you say is behind the confidence corporates and even the federal government reposes in Stanbic IBTC when it comes to debt or equity transactions in Nigeria?
I think the most important characteristics that have endeared us to our clients are our Integrity, professionalism and painstaking execution capabilities. For us, it is important that clients derive utmost value first before any other consideration. We are Nigeria’s largest stockbroking firm in terms of transaction value from 2006 to 2016 (2017 current market share of 15 per cent) while also leading the transaction volume chart in 2013 and 2014. The fact that we are supported by high quality research and have franchise capabilities across and beyond the continent due to our relationship with our parent company is significant advantage.
How significant was Stanbic IBTC Stockrokers Limited’s operation and performance in first and second quarters in 2017 to Stanbic IBTC Holdings Plc’s stellar performance recorded in its halfyear 2017 financial results?
SISL as one of the major subsidiaries allows Stanbic IBTC Holdings to present end to end financial capabilities to the clients which has been an important consideration for them in passing their transactions through the group.
Data obtained from the NSE showed that 10 stockbroking firms led by SISL, traded 70.71 per cent of the total value of stocks exchanged in eight months and 46.28 per cent in terms of volume. Specifically, Stanbic IBTC Stockbrokers led in value terms, trading N299.592 billion, which is 19.61 per cent. To what would you attribute this laudable achievement?
Our reputation for excellence is unrivalled, excellence in execution, research, sales and in sourcing for block flows. When clients know that you can deliver value to them as a company, they naturally gravitate towards you. We do not only seek to execute transactions, it is more important to build quality relationships with our clients and other stakeholders.
Nigeria is officially out of recession, firstly as an organisation, what are you doing to raise investor confidence and collectively as a nation what should we be doing now to attract investors?
We will continue to engage investors on the value that is in Nigeria as they can still get very good returns on their investment. The economy witnessed a significant improvement in the macro-economic fundamentals in 2017 as we have recorded consistent monthly drop in inflation from 18.72 per cent in January 2017 to 16.01 per cent in August 2017 due to base year effect. We have also had improvement in FX liquidity due to the new Investors & Exporters (I&E) FX window introduced by Central Bank of Nigeria (CBN) during the year. We saw significant improvement in volume of transactions executed in the equities market as well as the fixed income market. The intervention of the CBN in the capital market has helped in bringing Foreign Portfolio Investments (FPIs) into the country.
What advice will you have for someone who wishes to invest in Nigeria now?
My advice to investors is that they should consider valuation of the companies and take advantage of the undervalued stocks on the Nigerian Stock Exchange. We have several quality stocks that pay good dividend and offer capital appreciation which are attractive at the current levels. Diversification is also very important for investors to maintain a balanced portfolio.
The listing of major companies, particularly in the oil and gas, power and telecoms sectors, on the Nigerian Stock Exchange has remained a matter of intractable debate, with both sides offering strong arguments that appear to have stalemated the issue. What role can market operators like you play to break the deadlock and possibly encourage the targeted companies to quote on the local bourse?
The market can support the government’s financing efforts by raising capital for infrastructural projects through primary issues and public offerings. The major point here is capital whether for expansion or for diversification or even taking on new projects- that is what the Stock market provides. Companies that have a good business model and a good track record of profitability over the years, investors will want to be part of such businesses. The challenge we now have to take on as market operators is identifying those companies, engage them and intimate them of how the Nigerian stock market can both create more liquidity and value for their business. I must mention that although the operating environment is quite challenging at the moment for most businesses in those sectors. There has to be a really compelling story for the companies wishing to list on the exchange to get their desired level of liquidity.
The capital market is expected to play a major role in helping government finance a huge budget deficit this year. Considering the general apathy in the market, particularly by foreign investors, how well can the market support government’s financing efforts?
The federal government has always and will continue to tap into the fixed income market as a way of providing funds and finances to fund a budget deficit. We believe that the domestic pension funds and other investors have sufficient capacity to support government’s bond issues. Issuing project related bonds would also be an avenue to raise funds to plug the budget deficit in our view. This will, however, have to be looked at from a contract sanctity perspective. On the equity side of the capital market space, one way to fund the government deficit is by getting some of the properly-run government agencies to list on the exchange. Take for example NNPC listing on the NSE or perhaps the National Communications Commission (NCC). The power of sovereignty alone could be compelling enough for investors to invest and hence for the government to source the liquidity it requires.
What are some of the key lessons gleaned from the just concluded 2017 Standard Bank East to West Africa Investors’ Conference?
One of the most important lessons is that Nigeria is very key to investors looking at investing in Africa, the potential that the country has to offer is not in doubt, it is just important for them that the right policies are put in place.
Another lesson is that companies that are perceived to be quality organisations in terms of efficiency, corporate governance, effectiveness and client -centricity will always be of interest to investors.
Opportunities are still available in the stock market especially for long term investors.
SISL is the leading stockbroking firm in Nigeria, what goals and targets are you setting for yourself over the next two to three years?
Yes, we have consistently been the market leader in the stockbroking space over the last couple of years. Just like the brand we represent, we aspire to continue to be the market leader. For us, it is important to rebuild retail investor confidence in the Nigerian equities markets; our goal is to continue to use technology to drive this. We are committed to taking participation in the market to each household in Nigeria because empirically, it has been proven that the returns of the equities market over the long term is usually higher than the fixed income returns.
We will also continue to partner with the Securities and Exchange Commission and the NSE to deliver on the development of the market. It is important for us also to continue to deploy the capabilities within the broader group and relationship with our parent company to introduce new products to the market.