Nigerian Stock Exchange Reviews Composition of Market Indices

The Nigerian Stock Exchange (NSE) has reviewed its NSE-30 composition, and the seven sectoral indices of the Exchange.

These include the NSE Consumer Goods, NSE Banking, NSE Insurance, NSE Industrial, NSE Oil & Gas, NSE Pension and the NSE Lotus Islamic Indices.

Following the completion of the review, Oando, Seven Up and UACN are among the companies to exit the NSE 30 index, while Dangote Flour Mills, NASCON Allied industries and Diamond Bank are to join others in the index.

According to NSE, under the consumer goods index, Northern Nigeria Flour Mills Plc has been granted entry into the indices.

Also, Equity Assurance and Mutual Benefit Assurance is considered entry into the NSE insurance index, while Regeny Alliance and Universal Insurance will be exiting the index.

Furthermore, Oando Plc has been removed from the NSE oil and gas indices, making way for Eterna Oil to enter into the index.

For the NSE Pension index, Honeywell Flourmills and International Breweries are on the entry side of the index.

The composition of these indices, according to NSE, becomes effective today, after the completion of the year-end review and index rebalancing exercise, which will see the entry of some major companies and the exit of others from the various indices.

NSE explained that 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 stocks are also selected based on market capitalisation and liquidity. The liquidity is based on the number of days the stock is traded during the preceding two quarters.

“To be included in the index, the stock must have traded for at least 70 per cent of the number of trading days in the preceding two quarters. 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 Insurance and Consumer Goods sector index, is comprised of the 15 most capitalized and liquid companies; Banking and Industrial Goods sector index, comprised of 10 most capitalized and liquid companies, while the Oil & Gas sector index, is comprised the seven most capitalised and liquid companies,” NSE said.

The Exchange added that the compiler of the indices maintains the right to modify the circulated selection above in connection with any mergers, takeovers, suspension or resumption of trading or any other company structure changes during the period before the effective date of the annual review.

By Helen Oji

The Guardian Newspaper January 1st, 2018

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