Nigeria Readies First ETFs

ETF Trends

Right in lockstep with the ongoing economic development and democratic push in Africa, the Nigerian stock exchange plans to list five exchange traded funds in 2013. This is a breakthrough trend that various emerging economies, such as China and Vietnam, have caught.

“They don’t see the need to look outside their own markets for capital growth because these markets are still growing and there is a pool of IPOs and corporate bond issuance yet to come to the market,” Lydia Malakis explains on FTSE Global Markets.

Chief executive officer Oscar Onyema announced that the Nigerian Bourse is listing the five ETFs in an effort to increase the number and type of products available to local investors, report Emele Onu and Ambrose Akor for Bloomberg BusinessWeek. The Lagos-based exchange will start a corporate governance index this year, which will “capture top companies” and encourage others to list, Onyema said. [Sharing Africa's Growth with ETFs]

Small- and mid-cap companies are encouraged to list as well, as regulations for the Alternative Securities Market will be reviewed this year. The Nigerian Bourse is the second-largest stock market in Africa, after South Africa’s. The Nigerian stock exchange has gained 18% in 2013.

Meanwhile, Vietnamese regulators have accepted ETFs to trade on local markets this year. The move is intended to bring more foreign investment, value and liquidity to the Vietnamese stock market. The framework to list and trade ETFs has been designed and completed. [Vietnam Readies First ETFs]

China is taking steps to launch ETFs on their local exchanges, as well as on the Tokyo stock exchange. China Asset Management and China Southern Asset Management are planning on offering physical ETFs linked to the Chinese stock market in the form of JDRs, or Japanese Depository Receipts. [China ETFs to Debut on Tokyo Exchange]

Furthermore, China is set to introduce the first physically-backed gold ETF to trade on local exchanges. The bullion-backed ETF is expected to gain the interest of institutional investors and sovereign wealth. The move could create a new demand for the precious metal. [China Readying Bullion-Backed Gold ETFs]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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