Paul Wallace
NIGERIANS will soon be able to invest in stocks such as Apple and LVMH Moet Hennessy Louis Vuitton in their local currency at their local bourse.
Not that these global companies are looking to sell shares in the African nation yet. The Nigerian Stock Exchange (NSE) plans to get custodian firms to issue depositary receipts against their stocks and offer them for trading in Lagos.
The unsponsored offerings would come from the holdings of the custodians and would not involve the concerned companies.
Nigeria is trying to develop its stock exchange by increasing liquidity and the products available for investors as it seeks to close the gap with South Africa, home to the continent’s biggest equity market.
Popular shares
“We’re looking to start with those with substantial business dealings in Nigeria, or a substantial Nigerian following,” chief executive Oscar Onyema said last week.
“For example, we know that Nigerians buy a lot of Apple and Louis Vuitton products. Nigerians also follow soccer. So, any football club that is listed is a potential.”
Apple and LVMH did not immediately reply to e-mails requesting comment.
Depositary receipts represent a stake in a foreign company that investors in a country can buy and sell with their local currency. Sponsored offerings involve the consent and participation of the companies, while unsponsored issues are made by depositary banks.
The exchange would finalise the details of the plan by the year-end, Onyema said.
It was seeking clarity from the National Pension Commission on whether pension funds would be allowed to invest in them, he said.
Onyema is also waiting for the central bank to say if there will be any restrictions on the trades, following new foreign exchange rules. On June 24, the regulator banned Nigerians from using the interbank currency market to buy Eurobonds and foreign shares.
On the premium board the NSE planned to start this year, Onyema said four local companies had qualified for the list. He declined to disclose them.
There should be “something closer to eight or nine companies” on the premium board when it opened, Onyema said. It was designed for companies that passed a corporate governance test set by the NSE and had a market value of more than $1 billion (R12.19bn), he said.
“They will provide a vehicle for local and international investors that want to track well-governed institutions to benchmark,” he said. – Bloomberg