The Nigerian Stock Exchange (NSE) has announced the final review of the composition of sectoral indices for the year 2017.
The sectoral indices comprise the NSE-30 modified market capitalization index with the numbers of included stocks fixed at 30, the top 15 most capitalized and liquid companies in the Insurance (NSE Insurance) and Consumer Goods sectors (NSE Consumer goods), top 10 most capitalized and liquid companies in the banking (NSE Banking) and Industrial Goods (NSE Industrial) sector and the top seven most capitalized and liquid companies in the Oil & Gas sector (NSE Oil and Gas).
A presentation of likely exiting and incoming companies made available by the local bourse suggested that Oando, Forte Oil and three other companies are likely to exit the NSE 30 index, an index that comprises of NSE’s 30 most capitalised listed stocks.
The bourse, revealed likely entrants of the NSE 30 to be Dangote Flour Mills Plc, Diamond Bank Plc, Nascon Allied Industries Plc, Candbury Plc and Sterling Bank Plc.
The NSE conducts the review of the sectoral indices which were developed using the market capitalization methodology, in preparation of a bi-annual rebalancing that takes place on the first business day in January and in July.
For the consumer goods sector the likely incoming companies include Northern Nigeria Flour Mills Plc, DN Tyre & Rubber Plc, Nigeria Enamelware Plc and likely exiting companies include 7Up Bottling Co. Plc, Vitafoam Nigeria Plc, Champion Breweries Plc .
Skye Bank Plc, Unity Bank Plc will likely join the NSE banking index, while Wema Bank Plc, Sterling Bank Plc have been listed as stocks to likely exit.
The NSE explains that the stocks for entry and exit 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.’
For the insurance index Equity Assurance Plc, Mutual Benefits Assurance Plc, Sovereign Trust Insurance Plc, Consolidated Hallmark Insurance Plc may join while Regency Alliance Insurance Plc, STACO Insurance Plc, Universal Insurance Plc, Standard Alliance Insurance Plc may leave.
In the same vein, Grief Nigeria Plc, Austin Laz & Co. lc may join the NSE Industrial index with a possibility of Portland paints & Products Nig Plc, DN Meyer Plc exiting the index.
The first trading day in January 2018 may see Oando Plc, MRS Oil Nigeria Plc leave the NSE Oil and Gas index while Japaul Oil & Maritime Services Plc, Eterna Plc have been listed as companies to likely join the NSE Oil and Gas index
Meanwhile, the NSE Pension index which is reviewed once a year (December) is likely to have Honeywell Flour Mills Plc, International Breweries Plc, Continental Reinsurance Plc, Cement Co of Northern Nigeria Plc on board by January whereas 7Up Bottling Co Plc, Oando Plc, Conoil Plc, united Capital Plc may likely exit the index.
Lafarge Africa Plc, Nigerian Aviation Handling Co. Plc has been listed as likely entrants to the lotus Islamic index and 7Up Bottling Company Plc, GlaxosmithKline Consumer Nigeria Plc as companies to likely exit the index.
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 deve loped 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.