LAGOS Dec 16 (Reuters) – Nigeria’s bourse is to list
its first exchange traded fund (ETF) on Monday, a South African
gold-backed fund that will broaden the exchange’s range of
products beyond equities and bonds, the stock exchange said on
Friday.
NewGold, originated by South Africa’s Absa Bank Limited
, has a primary listing in South Africa and before its
Nigeria debut had one other listing on Botswana’s bourse.
The fund will open on an initial offering of 1.096 billion
naira ($6.76 million), split into 400,000 units, to test demand
before any possible expansion into something bigger, a source at
the stock exchange told Reuters.
“You don’t want to list a million units and find out that
it’s not trading. They (ABSA) are testing the waters with this
and I am certain that this figure will go up based on the
uptake,” the source said, adding that ABSA plans to expand the
ETF around Africa, including in Ghana.
ETFs track equity or derivative indexes or a commodity but
trade like a stock on an exchange, giving investors exposure to
the underlying assets but at a much lower cost and with more
short-term flexibility.
Listing on the Nigerian bourse, sub-Saharan Africa’s
second-biggest, will increase liquidity for the security and
help diversify the stock exchange away from the equities that
currently dominate it, he said.
“We are trying to deepen and widen the capital market. We
want to provide different products not just plain vanilla,” the
source added.
“I see a lot of EFTs being listed earlier next year. We
already have an application to list another equity-based ETF
next year by a local issuer and they want … it by January.”
Nigerian equities have touched 8-year lows in recent weeks,
dragged down by banking and oil stocks, as foreign investors
spurn frontier markets and domestic funds to buy bonds in search
of better yields.
Continued…
