Stock Exchange reviews composition of market indices


The Nigerian Stock Exchange (NSE) is at the verge of completing the year end review for the NSE 30, NSE 50 and the five Sectoral Indices of the Exchange – the NSE Banking, the NSE Consumer Goods, the NSE Oil & Gas, NSE Industrial and the NSE Insurance.

The composition of these indices after the review will be effective on January 1, 2015. The review will witness the entry of some major companies and exit of others.
In the NSE 30 index, the likely incoming stocks are 7-Up Bottling Company plc, Seplat Petroleum plc, Unity Bank plc, Sterling Bank plc, and Mobil Oil Nigeria plc; while the outgoing stocks are Total Nigeria plc, GlaxoSmithklime Consumer plc, Fidelity Bank plc, Ashaka Cement plc, and FCMB Group plc.

Seplat Petroleum, Beta Glass Company plc, Caverton Offshore Support Group plc, Ikeja Hotels plc are likely to join the NSE 50 index while WAPIC Insurance plc, Continental Reinsurance plc, MRS Oil Nigeria plc, Cement Company of Nigeria plc are exiting the index.

For the NSE Consumer Goods Index, incoming stocks are: DN Tyre & Rubber plc, Vono Products plc, Union Dicon Salt plc, and Northern Nigeria Flour Mills plc; while Vitafoam Nigeria plc, Champion Breweries plc, National Salt Company Nigeria plc, and Dangote Flour Mills plc are exiting the index.

The NSE Banking Index will witness entry of Unity Bank plc, and Wema Bank plc; while Skye Bank plc, and Fidelity Bank plc exit.

Law Union & Rock Insurance plc, Prestige Assurance plc, Linkage Assurance plc and Guinea Insurance plc are the likely entrants into the NSE Insurance Index; while Unity Kapital Assurance plc, Universal Insurance plc, Staco Insurance plc and Equity Assurance plc exit.

The NSE Oil & Gas Index will recorded new entrants like Seplat Petroleum plc, Japaul Oil Maritime Services plc, and Beco Petroleum Products plc, while MRS Oil Nigeria plc, Eterna plc, and Conoil plc exit.

Ready to join the NSE Industrial Index are Avon Crowncaps & Containers Nigeria plc, DN Meyer plc, and Grief Nigeria plc; while Cutix plc, Portland Paints & Products plc, and Paints & Coatings Manufacturers plc will exit.

The Index Committee of the Nigerian Stock Exchange noted that the NSE-30, NSE-50 and NSE Industrial Indices are modified market capitalisation index with the numbers of included stocks fixed at 30, 50 and 10, respectively.

The numbers of included stocks in the NSE-Consumer Goods, Banking, Insurance and Oil/Gas Indices are 15, 10, 15 and 7, respectively.

The Stocks will be picked based on their market capitalisation from the most liquid sectors. The liquidity is based on the number of times the stock is traded during the preceding two quarters. To be included, the stock must be traded for at least 70 percent of the number of times the market opened for business.

The Committee further stated that the exchange was not oblivious of the fact that the number of the stocks that will be included in some of the indices may be inappropriate for optimal portfolio diversification; however, the numbers would be reviewed as sector conditions change.

The Nigerian bourse began publishing the NSE 30 Index in February 2009 with index values available from January 1, 2007. On July 1, 2008, the NSE developed four sectoral indices and one index in 2013, with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors.

The sectoral indices comprise the top 15 most capitalised and liquid companies in the insurance and consumer goods sectors, top ten most capitalised and liquid companies in the banking and industrial goods sector and the top seven most capitalised and liquid companies in the oil & gas sector.

The indices, which were developed using the market capitalisation methodology, are rebalanced on a biannual basis -on the first business day in January and in July.
The compiler of the indices maintains the right to modify the circulated selection above in connection with any mergers, take-overs, suspension or resumption of trading or any other company structure changes during the period before the effective date of the annual review.

Source : BusinessDay

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