Price methodology rules review: four stocks trade below 50 kobo …As market value rises by N191bn
Price methodology rules review: four stocks trade below 50 kobo
…As market value rises by N191bn
AS Nigerian Stock Exchange’s (NSE) amended par value and pricing methodology rules become effective today, four listed stocks on the bourse were traded below N0.50 kobo per share at the end of the trading.
The affected stocks; ABC Transport Plc, Lasaco Assurance Plc, Prestige Assurance Plc and Royal Exchange Plc have been enjoying NSE price methodology rules which stated that a stock can not trade below N0.50 kobo per share.
The new rules which become effective today, categorized listed stocks into three groups base on their share prices.
According to the NSE, the new rules specified revised price limit, price movements and tick sizes (price floor, minimum pricing increments and minimum quantity to be traded that will change the published price).
The bourse highlighted that price discovery for every listed shares under the new Par Value Rule remain determined by market forces and thus, equities may now trade below the erstwhile price floor 50kobo/unit.
All the affected stocks at the end of today’s trading dropped from N0.50 kobo per share to N0.45 kobo.
The implications of the new rules according to analysts at United Capital is that, the policy may result in sharp depreciation of up to 37 listed securities which has not trade above N0.50 kobo for a long time, especially insurance companies.
Some of them are; Cornerstone Insurance Plc, Equity Assurance Plc, Great Nigeria Insurance Plc, Guinea Insurance Plc, Hallmark Insurance Plc, International Energy Insurance Plc, Lasaco Assurance Plc, Mutual Benefit Assurance Plc, Niger Insurance Plc, Prestige Assurance Plc, Regency Alliance Insurance Plc, Royal Exchange Plc, Sovereigns Insurance Plc, Staco Insurance Plc, Standard Insurance Plc, Unix Insurance Plc, Unity Kapital Insurance Plc and Universal Insurance Plc.
The analysts believed that the new rules would increase market liquidity and improved price discovery especially for lowly priced stocks.
“With reduced minimum price of 1kobo, stocks in the C categories that are intrinsically less than N0.50 kobo may be more prone to strategic trades or possible acquisition. Some of the insurance names listed above are the biggest suspects especially as the sector remains ripe for further consolidation, amid the proposed implementation of more stringent risk-based supervision guidelines by the regulators. Others in this category include; FTN Cocoa Plc, John Holt Plc, Multitrex Plc, AfrInsurance Plc, Aso Savings & Loans Plc, Deap Capital Plc, Resort Savings Plc , Evan Medical Plc, Union Diagnostic Plc, Chan’s Plc, Courtville Plc, Omatek Plc, Multiverse Plc, Thomas Wyatt Plc, Japaul Oil & Maritime Services Plc, ABC Transport Plc, Academy Press Plc, Afromedia Plc, Dakar Communication Plc, NSL Tech Plc, R.T. Briesco Plc and Tantalizer Plc which all closed at N0.50 kobo on Friday 26th Jan. 27, 2018.”
However, the market capitalization of equities listed on the Exchange on Monday began the week with N191 billion gaining.
Similarly, market breadth closed positive, recording 41 gainers against 13 losers.
In summary, the All Share Index (ASI) gained 532.72 basis points, representing a growth of 1.22 percent to close at 44,306.48 points.
On the sector performance indicators’ board, NSE ASEM maintained its previous close and the consumer goods sector recorded the only loss for the trading day. The industrial sector gained on its previous index close of 2,287.02 points by 1.73 percent to close at 2,326.62, making it the best performing sector for today’s trading session.
Diamond Bank Plc, Transnational Corporation of Nigeria Plc, C&I Leasing Plc, Fidelity Bank Plc and NPF Microfinance Bank Plc topped the gainer’s chart while Dangote Sugar Refinery Plc, Red Star Express Plc, ABC Transport Plc, Lasaco Assurance Plc and Linkage Assurance Plc topped the loser’s chart.
Despite an improved NSE benchmarks, market activities slowed down by 39.32 percent in terms of volume and 17.50 percent in terms of value as previously recorded trades of 945 million shares valued at N7.12 billion shrunk to 573 million shares valued at N5.88 billion by the closing bell today.