By OLUSHOLA BELLO, Lagos –
The Nigerian Stock Exchange (NSE) at the weekend announced the result of its sectoral index review which showed that Dangote Flour, Nascon Allied Industries, Cadbury Nigeria and Sterling Bank are to gain entry into the NSE 30 Index which holds NSE’s 30 most capitalised stocks.
The review of the market includes the NSE-30, and the six sectoral indices of the Exchange, including NSE Consumer Goods, NSE Banking, NSE Insurance, NSE Industrial, NSE Oil and Gas and the NSE Lotus Islamic Indices.
These indices are normally reviewed bi-annually in June and December except for NSE Pension index that is reviewed once annuallyin December.
According to the Exchange, the review will witness the entry of some major companies and exit of others.
The NSE 2017 Year End Index Review shows that the NSE-30 index will likely exit Seven Up Bottling Company, Oando, UACN, Julius Berger and Forte Oil.
The NSE Insurance Index welcomed Equity Assurance, Mutual Benefit Assurance Plc and Sovereign Trust Insurance and Consolidated Hallmark Insurance, while Regency Alliance Insurance, Staco Insurance, Universal Insurance and Standard Alliance Insurance gave way by exiting the index.
The NSE Industrial index parted ways with Portland Paints and Products Nigeria and DN Meyer with the entry of Grief Nigeria and Austin Laz.
Meanwhile, stocks coming in under the NSE Consumer Goods are NNFM, DN Tyre and Rubber and Nigeria Enamelware, while companies existing the index are Seven Up Bottling, Vitafoam Nigeria, and Champion Breweries
NSE Banking Indices have Skye Bank and Unity Bank coming in, while exiting from the index are Wema Bank and Sterling Bank. Also entering NSE Oil and Gas index are Japaul Oil and Eterna, while Oando and MRS Nigeria will leave the index
Under Pension Index, that is entities in which Pension Funds can be invested, incoming companies are Honeywell Flourmill, International Breweries, Continental Reinsurance and CCNN, while incoming companies under NSE Lotus Islamic Index are Lafarge Africa and Nahco.
The Exchange explained that “the NSE-30 and NSE Industrial Indices are modified market capitalisation index with the numbers of included stocks fixed at 30 and 10 respectively.
“The stocks are selected based on their market capitalisation from the most liquid sectors, while the liquidity is based on the number of times the stock is traded during the preceding two quarters.
“To be included, the stock must have traded for at least 70 percent of the number of times the market opened for business.
“Exchange is aware that the number of the stocks included in some of the indices may not be practically suitable 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 fifteen 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.
With a 43.02 per cent return year-to-date, the equity market has shown signs of great positive performance so far in 2017.