By Modupe Gbadeyanka
One of the leading financial information service companies in Nigeria, Proshare, has announced the introduction of two new indices to track performance of publicly quoted firms led by two billionaire businessmen, Mr Aliko Dangote and Mr Tony Elumelu.
The two new indices created by the company are Dangote Index and the Elumelu Index or the Tony Index.
It was explained that the new indices “do not represent an attempt to provide either buy, sell or hold advice to equity investors but simply indicate large cap equity market guidance.
“The Indexes will be Value-weighted and adjusted for price changes daily. At times when the Indexes show emergent trends in contrast to overall mainboard movement, a technical brief would accompany the Index to explain market adjustments and provide perspective and context.
“The Indexes do not represent an official Index of any Exchange but are the product of Proshare research and markets groups,” the firm said.
Proshare stressed that the two new indices will “track major market action of stocks within a common core share ownership grouping.”
At the moment, four companies with Mr Dangote as the largest shareholder are trading on the Nigerian Stock Exchange (NSE).
The companies are Dangote Cement, Dangote Sugar, Dangote Flour, and NASCON are responsible for over 31 percent or a third of the N11.173 trillion market capitalisation of the ASI and influence the ASI’s broad market direction when significant changes happen to any of the stocks in the Dangote portfolio.
On the other hand, companies with Mr Elumelu as the highest shareholder are UBA, Transcorp, Transcorp Hilton, Africa Prudential and United Capital. They contribute 3.14 percent or N350.5 billion to the NSE’s market capitalisation of N11.173 trillion.
Proshare explained that since Mr Dangote’s listed companies collectively influence about a third of the equities market by capitalization news and information concerning the group should be a good predictor of potential market direction by volume and perhaps value.
It said for investors interested in Index-linked securities, a Dangote Index would give some indication of market direction and likely bullish and bearish turning points, noting that the value-weighted indices will be used to compare movements of the daily ASI and provide investors with signalling information to guide market action.
“In addition to the Dangote Index an “Tony Index” which is also a value-weighted equity Index will be calculated and monitored daily along the same lines as the Dangote Index,” it said.
Business Post reports that before the creation of these new indices by Proshare, the NSE operates 18 different indices and they are the All-Share Index, NSE 30 Index, NSE 50 Index, NSE Main-Board Index, NSE Premium Index, NSE Pension Index and NSE Corporate Governance Index.
Others are the NSE Banking Index, NSE Industrial Goods Index, NSE Insurance Index, NSE Oil and Gas Index, NSE Consumer Goods Index, Lotus Index, ASEM Index, Afrinvest Bank Value Index, Afrinvest Dividend Yield Index, Meristem Growth Index and Meristem Value Index.
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