The Namibian Stock Exchange’s (NSX) local index, which caters for only Namibian primary listed companies, increased by 9.54 percent in 2017.
The NSX overall Index during the period under review increased by 22 percent against the JSE All Share Index which increased by 17 percent.
The report stated that although Regulation 28 can be attributed for creating a large demand side of local securities, foreign taxation legislation had also made local shares more attractive in the last three years.
This comes as South Africa implemented a 15 percent withholding tax on dividends, while local investors have a commercial incentive to buy local securities where they receive the full dividend.
“When analysing the performance of the Namibian securities over a 10 year period, it is clear that the local market has become more active of late and there is a demand for local securities that is not currently being met, both from a regulatory as well as a commercial perspective,” the NSX report said.
“Due to the regulation, most pension funds also have a “buy and hold” philosophy, which decreases the liquidity of the securities even further.”
The NSX believes the setting up of a Central Securities Depository (CSD) for trading in electronic script, will open up the Namibian market to additional interest from international investors, increasing demand, not only for shares, but specifically on the bond market.
“The NSX has, from its reserves, funded the project to launch a Central Securities Depository in the Namibian market in partnership with the Bank of Namibia.
“Formalisation of the bond market and the eventual launch of derivatives are expected to follow the CSD launch. We hope by developing the market in these projects, more Namibian companies will open their shareholder base and come to market by listing,” NSX Chairman, David Nuyoma said.
According to the report, the overall value traded during 2017 was N$13.6 billion compared to N$14 billion in 2016.
Highlights of 2017 included the primary listings of Letshego Holdings (Namibia) Ltd and Nimbus Infrastructure Ltd.
The NSX noted that there is still uncertainty on the modalities that will be used in the implementation of Regulation 28 to the Pension Fund Act that prescribes that 35 percent of total pension fund assets be domestic assets.
“It is clear localised products are required to fill the void, as the current investment in dual listed stocks decline. The long-term effect on the NSX on the reduction in the dual listed percentage of assets is impossible to determine at this stage,” Nuyoma said.
The total government debt securities at the end of 2017 stood at N$46.3 billion (N$28.4 billion Government bonds and N$17.9 billion treasury bills) up from N$9.98 billion at the end of 2010 plus N$ 15.4 billion (at exchange rate of 31 December 2017) internationally and N$750 million listed on the JSE.