The Nigerian Stock Exchange (NSE) Premium index has recorded a gain of 48.53 per cent in three years.
The index comprises of Access Bank, United Bank for Africa (UBA), Zenith Bank, FBN Holdings, Dangote Cement, Lafarge Africa (Wapco) and Seplat Petroleum Development Company.
The Nigerian Stock Exchange (NSE) launched a new listing platform, the Premium Board and the associated Premium Board index on August 25, 2015.
The board features companies that meet the Exchange’s most stringent listing criteria of capitalization, governance and liquidity. It aims to provide a platform for greater global visibility for eligible African corporates to make it easier for them to attract global capital flows and reduce the cost of funding.
The Premium Board index on the other hand, is an equity index designed to provide a benchmark to capture the performance of companies listed on the Premium Board. The index will also provide a basis for developing products such as ETFs and equity index derivatives that are tradable on the bourse.
The NSE Premium Board index had a three years return of 48.53 per cent. The index moved from 1,664.64 basis points as at August 25, 2015 to 2,472.51 as at September 7, 2018. The index which outperformed the NSE-All Share Index return of 13.92 percent over the same period.
However, the stocks market so far in 2018 has been dominated by sell-off across the boards as political tension heightened. But despite this the NSE Premium Board Index declined by 3.57 per cent, outperformed the NSE-ASI which recorded a loss of 11 per cent as at September 7, 2018.
Speaking on the performance of the board recently, the chief executive officer of NSE, Oscar Onyema stated that “companies on the Board are well-run corporates with sound governance, which is part of the requisite qualification for listing on the Premium Board. These stocks which currently have strong visibility on the Exchange will further appeal to investors, seeking to invest in companies with the highest standards of corporate governance.”
He noted that from inception to date, the Premium Board Index has continued to outperform the benchmark NSE ASI.
The managing director of HighCap Securities Limited, Mr. David Adonri noted that companies listed on the NSE Premium Board Index have good fundamentals that will attract investors to the Board. He added that investors especially the foreign investors will invest in good companies, saying that “investors will buy the shares of good companies.”
He noted further that a good company will always perform well in terms of sales or revenue and make profit.
He stated that it can be quite difficult to know a good company to invest in, especially in the short term, or when the general economic condition is good and favourable for businesses, saying that only few companies can survive crisis or continue to makes sales and profit in crises.
Adonri added that that is why performance over a long period of time differentiates a good company and we can see this on the stocks of the companies listed on the NSE Premium Board Index.
Also, the chief operating officer of investData Consulting Limited, Mr. Ambrose Omordion noted that the index has been designed to provide a benchmark for investors looking to track the performance of large issuers with excellent corporate governance and sustainable business models and this is what the foreign and institutional investors are looking for.
He added that the companies listed on Premuim Board index have track record of strong earnings and their share prices have helped the index to outperform the whole market performance.
According to omordion, Dangote Cement as a stock listed on the index, for instance, determines the direction of the market most times. Whenever there is any price drop in Dangote Cement, the market will decline and if there is any rise in shares of Dangote Cement, the market closes positively.
During the migration of UBA shares to the Premium Board, the group managing director/CEO, UBA, Kennedy Uzoka noted, “It is instructive to bring back memories of our pioneer Initial Public Offer (IPO) in the Nigerian banking sector, following our listing on the NSE in 1970. Since then, we have remained committed to the development of the NSE and the broader capital market, through our equity and debt listings as well as strategic partnerships with the leaderships of the Nigerian capital market.
“More so, this premium listing of UBA shares is a further attestation of our size and the liquidity of the stock on the Exchange. It is also reinforcing of our continuously evolving sound corporate governance, which is a pre-requisite for companies to be listed on the Premium Board of the NSE.
“In expectation that this premium listing will further enhance the visibility of our stock on the Nigerian Bourse, we believe our decision to migrate UBA shares to this new Board will deepen value creation for our shareholders. It is pertinent to reiterate our commitment to sustainable and superior wealth creation for all shareholders, as we duly appreciate and place significant premium on everyone’s investment in UBA Group.”