The Alternative Securities Market (ASeM) of the Nigerian Stock Exchange (NSE) has exhibited stiff resistance to the declining macro-economic variables witnessed in the country recently after gaining 6.72 per cent at the end of transactions for the week ended December 19, 2014.
AseM is a specialized board for emerging businesses – small and mid-sized companies with high growth potential. It gives such companies the opportunity to raise long-term capital from the capital market at relatively low cost, allowing them to grow and institutionalize.
According to the NSE: “There is no limit to the amount of capital a company listed on ASeM can raise, as long as the company meets regulatory requirements including those of the Corporate Affairs C ommission (CAC) and the Securities and Exchange Commission (SEC).”
A review of the weekly report for the week ended December 19, 2014 showed that the AseM index appreciated to 1,128.44 basis points from the 1,057.36 points that was achieved the preceding week.
This is a sharp contrast to the NSE All-Share index, which has witnessed incessant decline, shaving 1.49 per cent in the week under reviewing to negative macro-economic variables such as declining oil prices, devalued naira, and uncertainty over forthcoming elections, among other variables.
Similarly, the AseM Index recorded 2.05 per cent growth in the week proceeding the week under review.
The emerging trend is shift from what was obtainable in that market, which was thought to be moribund as it usually closed flat.
The Managing Director of Lamberth Securities, David Odonri stated that the growth in that sector of the equities market is likely due some price sensitive information which has moved prices of stocks listed in that board thereby impacting on the growth of the index.
“There might be some company specific factors that are propelling the prices in the AseM that are strong enough to neutralise the negativeee macro-economic variable,” he noted.
On his part, Mr Tony Mordi, who is a Senior Stockbroker with APT Securities, agreed that the AseM has been receiving impressive patronage as a result of sentiments that may be borne from people or investors who think that the equities listed there are under-valued.
He said: “NSE AseM has been receiving impressive patronage from people who think that the stocks there are under-valued and should receive some patronage. I think it is purely based on sentiments.”
Mr Mordi, is concerned about the sustainability of this trend, which he said is paramount.
Further review of the NSE weekly report in the period under review indicated that Omoluabi Savings and Loans Plc, which is listed on the AseM board has received so much patronage from investors that earned it the second position in the top 10 gainers’ table for the week.
According to the report, Omoluabi Savings and Loans Plc added 10 kobo or 14.20 per cent to its 70 kobo opening price to close at 80 kobo.
Recall that the company recently listed on the NSE at 55 kobo per share after a successful Initial Public Offer (IPO), which saw the company offer three billion shares at 55 kobo per share to the public.
The Chief Executive Officer (CEO) of the NSE disclosed during the listing of the company that the listing boosted the ASeM Index and market capitalisation of the board by about 70 per cent to N6.67 billion.
Mr Mordi is of the view that that the AseM may experience decline when investors begin to sell or dump the stocks (profit-taking) after realising their profit in the stocks.
“If people who bought into those stocks realise that they would be making as much as 50 per cent gain, they might start engaging in profit-taking which may lead in a massive drop of those stocks,” he highlighted.
He, however, advocates for ways to ensure that the growth is sustainable.
Source : Tribune