News Column

Skye Bank, Wema Bank Exit NSE's Market Indices

July 1, 2014

Nkiruka Nnorom

SKYE Bank and Wema Bank Plc have been eased out of the Nigerian Stock Exchange, NSE's market indices following the biannual rebalancing undertaken by the Index Committee.

On biannual basis, the NSE reviews itsNSE 30, NSE Lotus Islamic Index (NSE LII) and the five Sectoral Indices, which include: the NSE Banking, the NSE Consumer Goods, the NSE Oil & Gas, the NSE Industrial and the NSE Insurance.

The composition of the indices is expected to take effect today (Tuesday July 1, 2014)

On the NSE 30 Index, Ashaka Cement Plc was brought in, while Skye Bank was eased out. On the NSE Lotus Islamic Index (NSE LII), UACN was also brought in and NAHCo exited.

The review saw Champion Breweries joining the NSE Consumer Goods, while DN Tyre & Rubber Plc was removed; Sterling Bank joined the NSE banking Index, while Wema Bank was removed.

On the NSE Insurance Index, two firms - Staco Insurance and Unity Kapital Assurance - were brought in, while Consolidated Hallmark Insurance and Prestige Assurance were eased out.

Meanwhile, the NSE Oil & Gas and the NSE Industrial indices remained unchanged.

In a statement communicating the changes, the Index Committee explained that the NSE-30 and NSE Industrial Indices are modified market capitalisation indices with the numbers of included stocks fixed at 30 and 10 respectively, while the numbers of included stocks in the NSE-Consumer Goods, Banking, Insurance and Oil/Gas Indices are 15, 10, 15 and seven in that order.

The stocks are selected based on their market capitalisation 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 be traded for at least 70 percent of the number of times the market opened for business.

The NSE 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 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.

On July 2012, the Exchange launched The NSE LII which consists of companies whose business practices are in conformity with the principles of Shari'ah with the aim of increasing the breadth of the market and creating an important benchmark for investments as the alternative non-interest investment space widened.

The Committee stated that all the companies that appear on the Islamic Index have been thoroughly screened by Lotus Capital Halal Investment in accordance with a methodology approved by an internationally recognised Shari'ah Advisory Board comprising of renowned Islamic scholars.

The price 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.

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Source: AllAfrica

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