NSE Reviews Market Indices: Fidelity Bank Joins as Forte Oil Exits
By Modupe Gbadeyanka
Next week, the Nigerian Stock Exchange (NSE) is expected to carry out a reclassification of the NSE 30, and the six sectoral indices and information reaching us indicates that Fidelity Bank, Cadbury Nigeria and others may make the list.
However, companies that are likely to be dropped include Forte Oil, Conoil, Paints & Coatings Manufacturers Plc and others.
The six sectoral indices to be reviewed are the NSE Consumer Goods, NSE Banking, NSE Insurance, NSE Industrial, NSE Oil & Gas and the NSE Lotus Islamic Indices.
This exercise is normally done bi-annually (June and December) except for NSE Pension Index, which is reviewed once in the year (December).
“With the review, we will witness the entry/re-entry as well as exit of some major companies,” the NSE said in a statement on Wednesday.
It was disclosed that under the NSE 30 Index, Fidelity Bank Plc is likely to join, while Conoil Plc might exit.
Furthermore, under the NSE Lotus Islamic Index, Total Nigeria Plc is shortlisted for inclusion, while Forte Oil Plc is likely to leave.
But for the NSE Consumer Goods Index and the NSE Banking Index, there might likely be no changes at all.
Similarly, the NSE Oil & Gas Index will likely not experience any change, according to the statement issued by the NSE.
However, under the NSE Insurance Index, Linkage Assurance Plc, Regency Alliance Insurance Plc, and
Universal Insurance Co. Plc may be included, while Sovereign Trust Insurance Plc, Unity Kapital Assurance Plc, and Mutual Alliance Insurance Plc are exiting.
Lastly, First Aluminium Nigeria Plc is joining the NSE Industrial Index, while Paints & Coatings Manufacturers Plc quits.
However, the composition of these indices after the review will be effective on July 3, 2017.
The stock market regulator explained in the statement that The NSE-30 and NSE Industrial Indices are modified market capitalization index with the numbers of included stocks fixed at 30 and 10, respectively.
The stocks are selected based on their market capitalization from the most liquid sectors. 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.
The NSE explained that it was 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, it developed four sectoral indices and developed the NSE Pension 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 15 most capitalized and liquid companies in the Insurance and Consumer Goods sectors, top 10 most capitalized and liquid companies in the Banking and Industrial Goods sector and the top seven most capitalized and liquid companies in the Oil & Gas sector.