The Nigerian Stock Ex?change (NSE) has an?nounced that it was put?ting final touches to the Year End review for the NSE 30, NSE 50 and the five Sectoral Indices of The Exchange – the NSE Bank?ing, the NSE Consumer Goods, the NSE Oil & Gas, NSE Industrial and the NSE Insurance.
According to the announcement, the composition of these indices after the review will be effective on January 1, 2015. The review will witness the entry of some major companies and Exit of others.
As the Index Committee ex?plained, The NSE-30, NSE-50 and NSE Industrial Indices are modified market capitalisation index with the numbers of included stocks fixed at 30, 50 and 10, respectively. The numbers of included stocks in the NSE-Consumer Goods, Bank?ing, Insurance and Oil/Gas Indices are 15, 10, 15 and 7, respectively.
The Stocks will be picked based on their market capitalisation from the most liquid sectors. The liquid?ity is based on the number of times the stock is traded during the pre?ceding two quarters. To be included, the stock must be traded for at least 70 per cent of the number of times the market opened for business.
The Committee further stated that the exchange was not oblivi?ous of the fact that the number of the stocks that will be included in some of the indices may be inap?propriate for optimal portfolio di?versification; however, the numbers would be reviewed as sector condi?tions 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, the NSE developed four sectoral indices and one index in 2013, with a base value of 1,000 points, designed to provide invest?able 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 In?dustrial Goods sector and the top seven most capitalised and liquid companies in the Oil & Gas sector.
The indices, which were devel?oped using the market capitalisa?tion methodology, are rebalanced on a biannual basis -on the first business day in January and in July.
The compiler of the indices maintains the right to modify the circulated selection above in con?nection with any mergers, take?overs, suspension or resumption of trading or any other company structure changes during the pe?riod before the effective date of the annual review.
Under the NSE 30 index the like?ly incoming companies are 7-up Bottling Co. Plc, Seplat Petroleum Plc, Unity Bank Plc, Sterling Bank Plc and Mobil Nigeria Plc. While those likely to be outgoing are To?tal Nigeria Plc, GlaxoSmithkline Consumer Plc, Fidelity Bank Plc, Ashaka Cement Plc and FCMB Group Plc.
Under the NSE 50 index, those likely coming in are: Seplat Petro?leum, Beta Glass Co. Plc, Caverton Offshore Support Group Plc and Ikeja Hotels Plc. And those likely to exit are WAPIC Insurance Plc, Continental Reinsurance Plc, MRS Oil Nigeria Plc and Cement Co. of Nigeria Plc.
In the NSE Consumer Goods category, likely incomers include DN Tyre & Rubber Plc, Vono Prod?ucts Plc, Union Dicon Salt Plc and Northern Nigeria Flour Mills Plc. Those likely to exit are Vitafoam Nigeria Plc, Champion Breweries Plc, National Salt Co. of Nigeria and Dangote Flour Mills Plc.
