An ocean apart: Of NGX and JSE

By Tony Monye

Frankly, stock markets are ‘informed’ platforms of some frenetic pace and mind-boggling trading activities. And, when the markets get into their amazing rallies, their gains and their pains are, with uttermost clarity, exposed. Naturally, every player always wants to quickly shift during market’s tranquil demeanour or untidy performances. Because in them, there exists sans significance. Conventionally, in the measure of per square space, the trades are huge in value parlance, debatably the largest in any country.

Stock markets have always had a lodestonic effect on me. Their allures embrace difficult descriptions. The frenzies, rowdiness of trades, the market fate and the power of the stakeholder faith in the bourse glaringly point at the direction of growth in a contemporary economy. Its sheer size succinctly reflects the strength and extent of the private sector participation in the economic life of a nation. Like many other phenomena, stock market activities can be quite blurry to the uninitiated but are excitingly scintillating to the initiates. Driven by outcome expectations, although they may appear otherwise, each trade echoes no gain – no loss. It is only because trades aren’t zero-summed.

Stock markets are the same all over the world. It doesn’t matter if they are sited in Africa, America, Europe or Asia. Stock markets churn out massive transactional details in the form of number of deals, volume and value of deals and how they impact market capitalisation (rise/ fall), the ascend and descent of all-share index, etc, at the end of each trading day. These statistical numbers aren’t idle. They have got deeper meaning and are of massive utility to the initiates, for the market and for the economy, whether standing singly or comparatively. Recall that a photo gifts us a thousand words. That is, pictures create words. But words also craft photos, though not always as elaborate. Statistics also have the same creative energies. They can generate words as well as paint pictures. Statistics are about innuendos and allusions and they do a lot more. Through values, they reveal trends. Through trends, they expose direction. Through direction, they can disclose vision. Well, it can go on and on. Being used as comparative analytical tools, statistics can make huge sense of ordinary numbers. And, in contrasting, they are also imbued with the power to fetch pains. Though unlike facts, statistics are pliable. Just engage stock traders or rather, a statistician. Of all kinds of statistics, naked ones are the most important. They are reflectively unbiased, arrogant and lacking in any form of humour.

Quite recently, I came into some stirring statistics from the Johannesburg Stock Exchange (JSE) – by far the largest in the continent and got picked on by them. I could not say, with a wave of the hand, it was not my hot-bowl of amala. I chose not to sit back. The numbers virulently attacked every aspect of my senses. I therefore decided to attempt an elaboration of the sheer size and influence of the JSE, with no space for hollow rhetoric or meaning-free soundbites. In exposing, I am in the search for fuller meaning.

Economically and politically, it is not unknown that Pretoria and Abuja are in a slugfest, with each nation continuously attempting to expand its spheres of influence, within and without the continent. As rival nations, Nigeria and South Africa occupy the first two slots economically. In the arena of stock markets, between them, the numbers cannot be differentiated further. The West African country’s statistics aren’t just, as they say, it. Their differences in value reveal that in life mates are mates. Non-mates are non-mates. Facts lean towards objective conclusions; opinions are subjective. Johannesburg Stock Exchange doesn’t mate with the Nigerian Exchange. In fact, this is a fact.

As far as the stock market is concerned the challenge isn’t coming from outside of Africa. It isn’t coming in from India or China. Or from the New York Stock Exchange (NYSE) or is it from the London Stock Exchange (LSE). Look to the extreme south of the continent. That’s where the main challenge is coming from. It is from South Africa. It is also from Egypt and even from Namibia. It is often said that for tranquility to predominate the immediate clime, the test must clearly come from afar. Although the Nigerian Exchange (NGX) numbers are bigly poignant, way off the pace, there doesn’t appear to be much calm here. There is. It’s best described as iced cool. 

The Nigerian GDP is about one hundred billion dollars ahead of the South African number but Ramaphosa’s country has almost four hundred corporations on its stock market where Buhari’s homeland has just one hundred and sixty. The JSE, as a platform for capital raising, is more attractive. JSE’s market capitalisation is in excess of one trillion dollars while the NGX’s value is just about fifty billion. The JSE is more liquid. With reference to market capitalisation as a function of GDP, the South African statistic is about three hundred percent, with the NGX contributing so much less at nine. It means the South African economy is more private sector-driven than the Nigerian.

Beginning from the global financial crisis, the NGX has been riding through a dark phase for several reasons, chief amongst others, include, citizen apathy, low yield, regulatory issues, infractions, etc. I doubt if any genuine market enthusiast thinks it cannot be revamped. Presently, the stock market is the exact opposite of a good activity level. It is an ordeal. Whatever would be the fate of the Nigerian Exchange, the players, professional bodies, the managers and other stakeholders would have to decide. For the matters of the NGX’s life, the discussions, from now on, should no longer be fluid. Let’s get them switched on. There is absolutely no need to panic because the greatest of dreams usually start out as oversized coats. More importantly, in these discussions lies the NGX’s future. Is the JSE too far to touch? Perhaps, time and the Nigerian capital market stakeholders will tell.

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Tony Monye, an economist, is managing @ Rham Durham Consulting Limited. He can be reached at tonymonye@yahoo.com