The Nigerian Stock Exchange (NSE) has said that one major reason for low retail investment appetite in the market is inadequate knowledge of investment products and benefits for retail investors.
The Chief Executive Officer, NSE, Oscar Onyema, who stated this at the fourth edition of the NSE market data workshop, said despite the evolving needs of consumers demanding for financial information globally, Nigeria still had low inclination towards investments.
He recalled a research by FSDH, which reported the savings ratio in Nigeria as one of the lowest among selected countries including China, India, Kenya, Malaysia, South Africa, United Kingdom, and USA.
“The ratio of mutual fund assets to Nigeria’s GDP is also very low at less than one per cent, despite the growth of mutual funds in the country in recent times.
“This underscores the importance of creating product offerings that promote diversity in investment, manage risk and make the information readily available to consumers. Exchanges and data vendors are already responding to this increasing demand using new tools for market data products,” he said.
Onyema noted that there had been a global increase in the general consumption and spending on financial market data and market data analytics, stretching beyond the market data typically provided by stock exchanges for equity trading.
He said: “Market commentators have estimated the value of total spending on all financial market data, analysis and news at about $28.5 billion; while the potential market size of financial information is valued at $50 billion, according to McKinsey estimates.
“At the Nigerian Stock Exchange we believe in customer centricity and we continue to foster partnerships with local stakeholders across the market, incorporating new technologies and expertise to drive market data by-products like derivatives and other structured products such as the Exchange Traded Funds.
“These structured products which are based on the accuracy of the underlying stock prices are being used by a broader set of professional users than those who participate on the stock exchange directly – to advise, monitor and/or validate transactions after they are executed.
“Today’s market data workshop underpins the need for the analysis of data to make it available in a format that is as disaggregated as possible in order to be easily consumed for investment purposes.
“The Nigerian Stock Exchange is in a privileged position to benefit from its broad relationships with market participants to drive the delivery of our strategy. Our focus on innovative and disruptive solutions is built around our market data. We are innovating with “smart channels” that can deliver on-demand data to investors – including USSD, mobile apps, SMS and IVR.
“In the same vein, we are ramping up awareness and strategic response to the challenges and opportunities of the 4th Industrial Revolution across the Capital Market ecosystem. This is to ensure that our market remains relevant and competitive in this era of “tectonic” disruption.
“As an organization known for best practices, we are also adding new practices to our culture. We are taking on bold new initiatives to change the Capital Market narrative in partnership with our peers within the wider financial industry, we can say with all certainty – the future is bright.”