The Nation Newspaper

Category: Equities

Meristem, 4 others account for 51% of stock market trades

Five stockbroking firms accounted for some 51 per cent of total market turnover on the Nigerian stock market in 2014, according to transactions details to be released today by the Nigerian Stock Exchange (NSE).

As the management of the NSE presents the scorecard for the market today, initial report obtained by The Nation showed that five stockbroking firms, including Meristem Securities Limited, Stanbic IBTC Stockbroking Limited, CSL Stockbrokers Limited, Rencap Securities Limited and Chapel Hill, accounted for 51 per cent of total transactions at the Nigerian stock market in 2014.

Market data showed that the five stockbroking firms traded 71 billion ordinary shares valued at N1.36 trillion during the year. Meristem Securities, Chapel Hill Denham and CSL Stockbrokers are fully-owned indigenous stockbroking firms. Rencap Securities is Nigerian subsidiary of Renaissance Capital, a global investment and finance company while Stanbic IBTC Stockbroking is a subsidiary of Stanbic IBTC Holdings, a member of South Africa’s Standard Bank.

There are more than 250 stockbroking firms at the stock market. The report highlights the concentration of activities within few major companies.

The report indicated that Stanbic IBTC Stockbroking recorded the highest turnover value with N472.415 billion or 17.5 per cent. CSL Stockbrokers Limited followed with transactions worth N262.99 billion or 9.7 per cent. Rencap Securities Limited traded equities worth N246.98 billion or 9.2 per cent. Chapel Hill Denham Management Limited accounted for N223.849 billion or 8.3 per cent while Meristem Securities Limited traded shares valued N156.210 billion or 5.8 per cent.

In volume terms, Stanbic IBTC Stockbrokers maintained the lead, recording 24.781 billion shares which represented 11.42 per cent, while CSL Stockbrokers traded 15.339 billion shares or 7.1 per cent. Chapel Hill Denham Management accounted for 14.849 billion shares or 6.8 per cent just as Rencap Securities Limited traded 12.252 billion shares or 5.5 per cent while Meristem Securities Limited accounted for 3.783 billion shares or 1.7 per cent.

Nigerian equities ranked among the worst-performing stocks globally in 2014 with average full-year decline of 16.14 per cent. Aggregate market value of all quoted equities closed 2014 at N13.226 trillion as against its opening value of N11.477 trillion for the year, indicating a loss of N1.75 trillion during the year.

January 14, 2015
Market chiefs hail emergence of Gwarzo as acting DG SEC

The capital market was in good mood yesterday as erstwhile executive commissioner, operations, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo took over as the acting director general of the apex capital market regulator.

The stock market, which had sustained a grueling downtrend since the beginning of the year and lost N1.5 trillion last week, paused momentarily. Market-wide indices at the stock market recorded their first gain of the year yesterday. The All Share Index (ASI), Nigeria’s country index and a value-based market-wide index that tracks prices of all quoted equities, recorded modest gain of 0.30 per cent. Aggregate market value of all quoted companies also rose by N30 billion.

Capital market operators said Gwarzo was a round peg in a round hole and a perfect fit that should be able to impact the market positively. On-the-spot opinion survey generally supported the choice of Gwarzo as acting director general.

Market operators described Gwarzo as experienced and diligent noting that his market-wide experience should provide a new verve of energy and initiatives that should drive the market to higher level.

Managing director, Capital Assets Limited, Mr. Ariyo Olushekun, said the acting director general had worked in nearly all segments of the capital market as a stockbroker and regulator at both the Nigerian Stock Exchange and Securities and Exchange Commission.

“He is an experienced person; I believe he knows the market sufficiently well having worked in various capacities. He should be able to add significant value, he is a good choice,” Olushekun, the immediate past president of the Chartered Institute of Stockbrokers (CIS) said.

Managing director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said change should always be seen as a positive thing as a good change can help to provide fresh energy to drive the process.

While commending the performance of the former director general, Chukwu said the acting director general would provide new drive for the market.

“It’s a positive thing, change should be seen as positive, we should see fresh initiatives and creativity to take the market to a higher level,” Chukwu said.

Chief executive officer, Finawell Capital Limited, Mr. Tunde Oyekunle, said Gwarzo should be able to bring his experience to bear on the market.

According to him, the acting director general is familiar with the operations of the market, which should give him the necessary background needed to succeed in his new position.

Gwarzo, 50, attended Bayero University, Kano and graduated with a Bachelors Degree in Economics in 1987. In 1991, he proceeded to the University of Birmingham in the United Kingdom where he obtained a Post Graduate Degree in Development Finance. He is a fellow of the Chartered Institute of Stockbrokers (CIS).

Over the course of some 25 years, he has played roles the in Nigerian capital market as an operator and as regulator. He had worked at Ministry of Trade, Kano State; Nigerian Stock Exchange, Century Merchant Bank Limited, Empire Securities Limited, Securities and Exchange Commission, Federal Mortgage Bank of Nigeria and MTL Global Investment Limited.

January 13, 2015
Nigerian equities lose N1.5tr in first week

Investors in Nigerian equities started this year with the unnerving hangover of the previous year as quoted equities lost about N1.5 trillion in the first week of the New Year. With consecutive decline all through the five trading sessions, the week saw most equities dropping to their lowest levels.

Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) closed the week at a low of N9.980 trillion as against its opening value of N11.478 trillion, representing a loss of N1.498 trillion.

The benchmark index at the NSE, the All Share Index (ASI)- a value-based index that tracks prices of all quoted equities and also doubles as country index for Nigeria, indicated a week-on-week average decline of 13.05 per cent. The ASI dropped from its opening index of 34,657.15 points to close at 30,143.02 points.

The performance in the first week of the year raised the spectre of the previous year. Nigerian equities ranked among the worst-performing stocks globally in 2014 with average full-year decline of 16.14 per cent. Aggregate market value of all quoted equities closed 2014 at N13.226 trillion as against its opening value of N11.477 trillion for the year, indicating a loss of N1.75 trillion during the year.

The performance in 2014 contrasted sharply against the exceedingly bullish performance in 2013. Investors pocketed some N4.25 trillion in capital gains in 2013. The main index at the NSE, the ASI recorded full-year return of 47.19 per cent rising from its opening index for the year of 28,078.81 points to close the year at 41,329.19 points. The performance in 2013 significantly surpassed the much applauded return in 2012 when equities posted average return of 35.45 per cent, equivalent to capital gains of N2.44 trillion.

A five-day loss of N1.5 trillion last week overshadowed the market situation, underlining fears by several analysts that the market may witnessed a prolonged bearishness this year. Overall outlook remained modest by most analyses.

Sectoral review showed widespread losses across the sectors. The NSE 30 Index, which tracks the 30 most capitalized companies, recorded a weekly decline of -12.97 per cent. The NSE Banking Index, which tracks the most active sector, recorded average loss of 13.28 per cent. The NSE Consumer Goods Index, which tracks large manufacturers of fast moving consuming goods, recorded return of -11.45 per cent. The NSE Lotus Islamic Index, which tracks Islamic compliant ethical stocks, recorded average loss of 13.46per cent. The NSE Insurance Index recorded the lowest sectoral loss of -2.45 per cent. The NSE Industrial Goods Index posted average return of -10.98 per cent while the NSE Oil and Gas Index dwindled by 6.22 per cent.

Total turnover last week stood at 2.01 billion shares worth N23.38 billion in 20,902 deals. The financial services industry remained the most active with 1.69 billion shares valued at N16.11 billion in 11,626 deals; thus contributing 83.8 per cent and 68.9 per cent to the total equity turnover volume and value respectively. Conglomerates sector followed with a turnover of 156.59 million shares worth N642.08 million in 1,569 deals. The third place was occupied by the consumer goods sector with 57.99 million shares worth N3.01 billion in 3,216 deals.

The trio of First City Monument Bank Plc, Ecobank Transnational Incorporated Plc and Zenith International Bank Plc were the most active stocks, accounting for 939.63 million shares worth N9.65 billion in 2,970 deals, representing 46.69 per cent and 41.27 per cent of the total equity turnover volume and value respectively.

With 14 gainers to 55 losers, Guinness Nigeria led the losers with a drop of 22.56 per cent to close at N130.21. Dangote Cement followed with a loss of 20.68 per cent to close at N158.65 while Access Bank dropped by 20.45 per cent to close at N5.25 per share.

On the upside, RT Briscoe recorded the highest percentage gain of 14.29 per cent to close at 88 kobo. Red Star Express followed with a gain of 6.60 per cent to close at N4.20 while Presco rose by 6.53 per cent to close higher at N26.10.

January 12, 2015
Stockbrokers urge investors to take advantage of low prices

•Commend Okumagba’s leadership

Investors should see the current downtrend at the stock market as enticing opportunity to buy into good stocks and take future positions in companies with prospects for good returns.

In a review of the market situation, a cross-section of stockbrokers said investors should not panic about the market situation.

They urged investors to leverage on the expertise of stockbrokers to make investment decision that would minimize their risk and maximize return.

Managing director, Finawell Capital Limited, Mr. Tunde Oyekunle, said that investors should come to the market to take their position.

He stressed the need to imbibe the consciousness of making wise investment decisions by buying attractive stocks at low prices.

Chief executive officer, Standard Union Securities Limited, Mr. Sehinde Adenagbe urged investors not to panic but rather move closer to stockbrokers for advice on investment opportunities in the capital market, which is a source of medium and long term investment.

Meanwhile, the stockbrokers have commended the leadership of Mr. Albert Okumagba. Okumagba was appointed mid last year as president of the Chartered Institute of Stockbrokers (CIS).

Managing Director, Express Discount Asset Management Limited, Alhaji Atiku Kafaru described Okumagba as round peg in round hole.

According to him, the institute has recorded laudable achievements within the short period that the new administration came on board.

“The current leadership of the institute has raised the bar in the area of visibility. Members are more interested in the institute’s activities. Membership has increased. The current leadership has a target of about one million members for 2015 through the Diploma Programme and this is achievable. As a prelude, the new leadership has signed Memorandum of Understanding (MOU) with some tested institutions in order to realize the target for increase in membership base. A lot of sensitization programme is going on in this regard,” Atiku said.

Oyekunle attributed the impressive performance of the new leadership to factors such as vibrancy, innovativeness, market experience and the strong determination to move the market to the next level. “This is not only being communicated through effective communication strategy but quite visible,” Oyekunle said

Adenagbe said the current leadership leverages on wide contacts to boost the operation of the institute. “The current leadership draws more members to the fold. Members that are not very active on the institute’s activities are now brought on board as every member is seeing the institute on a close range. It is dear that the current leadership is building a world class institute,” Adenagbe said.

Chief executive officer, Halicorn Consulting Limited, Mr. Segun Oye noted that the institute is making efforts to encourage members in spite of the challenges in the market.

“Efforts such as negotiating dues, discounting trainings and sustained dialogues are part of the efforts being made to encourage members,” Oye said.

Oyekunle described the recent stockbrokers’ conference as one of the best ever in the history of the institute in both the form and content.

He however urged the leadership to get closer to the members to understand their plights and give them value.

Atiku said the institute should endeavour to partner with the government functionaries to drive revenue that would enhance business opportunities for members.

January 12, 2015
FBN Holdings completes 100% acquisition of Oasis Insurance

FBN Holdings Plc has concluded the acquisition of the minority shareholdings in Oasis Insurance Plc, making the holding company the wholly owner of the insurance firm.

FBN Holdings completed the acquisition through FBN Insurance Limited, its insurance subsidiary. Following the completion of the acquisition, Nigerian Stock Exchange (NSE) has delisted Oasis Insurance Plc.

The Nation had exclusively reported the acquisition of the majority shareholding and takeover bid for the minority shareholdings in Oasis.

FBN Insurance Limited had acquired 71.2 per cent equity interest in Oasis Insurance through a block divestment in February 2014.

FBN Insurance subsequently launched a mandatory takeover bid for the remaining 28.8 per cent equity interest in Oasis Insurance in line with the rules of the Securities & Exchange Commission (SEC).

Regulatory filing indicated that by the close of the takeover bid on 31 July 2014, FBN Insurance Limited received a total of 1,289,493,953 ordinary shares bringing its shareholding in Oasis Insurance to approximately 91.1 per cent. FBN Insurance Limited elected to exercise its rights under Section 146(2) of the Investments and Securities Act to compulsorily acquire shares belonging to the minority shareholders having crossed the 90 per cent threshold. At the end of the 20-day statutory notice period FBN Insurance Limited increased its holdings by an additional 22,603,617 shares bringing its holdings in Oasis Insurance Plc to approximately 91.4 per cent.

FBN Insurance Limited thereafter transferred the sum of N310,649,730 to FBN Registrars as consideration for the outstanding 560,808,895 shares or 8.6% per cent. FBN Registrars will keep the fund in trust for shareholders who are yet to tender their share certificates. By this action, FBN Insurance Limited now holds 100 per cent equity interest in Oasis Insurance Plc.

The NSE yesterday confirmed the transaction, noting that Oasis Insurance requested for voluntary delisting after the full acquisition.

January 12, 2015
FBN Holdings acquires Oasis Insurance

•NSE delists Oasis Insurance

FBN Holdings Plc has concluded the acquisition of the minority shareholdings in Oasis Insurance Plc, making the holding company the wholly owner of the insurance firm.

FBN Holdings completed the acquisition through FBN Insurance Limited, its insurance subsidiary. Following the completion of the acquisition, Nigerian Stock Exchange (NSE) has delisted Oasis Insurance Plc.

The Nation had exclusively reported the acquisition of the majority shareholding and takeover bid for the minority shareholdings in Oasis.

FBN Insurance Limited had acquired 71.2 per cent equity interest in Oasis Insurance through a block divestment in February 2014.

FBN Insurance subsequently launched a mandatory takeover bid for the remaining 28.8 per cent equity interest in Oasis Insurance in line with the rules of the Securities & Exchange Commission (SEC).

Regulatory filing indicated that by the close of the takeover bid on 31 July 2014, FBN Insurance Limited received a total of 1,289,493,953 ordinary shares bringing its shareholding in Oasis Insurance to approximately 91.1 per cent. FBN Insurance Limited elected to exercise its rights under Section 146(2) of the Investments and Securities Act to compulsorily acquire shares belonging to the minority shareholders having crossed the 90 per cent threshold. At the end of the 20-day statutory notice period FBN Insurance Limited increased its holdings by an additional 22,603,617 shares bringing its holdings in Oasis Insurance Plc to approximately 91.4 per cent.

FBN Insurance Limited thereafter transferred the sum of N310,649,730 to FBN Registrars as consideration for the outstanding 560,808,895 shares or 8.6% per cent. FBN Registrars will keep the fund in trust for shareholders who are yet to tender their share certificates. By this action, FBN Insurance Limited now holds 100 per cent equity interest in Oasis Insurance Plc.

The NSE yesterday confirmed the transaction, noting that Oasis Insurance requested for voluntary delisting after the full acquisition.

January 7, 2015
Nigerian equities open New Year with N241b loss

Quoted equities on the Nigerian Stock Exchange (NSE) opened this year with a strong bearishness, raising the spectre of the previous year when equities recorded double-digit loss.

Equities lost N241 billion on 3,807 deals in the first trading session of 2015 with most indices at the stock market indicating widespread sell pressure. Aggregate market value of all quoted equities closed yesterday at N11.237 trillion as against its opening value of N11.478 trillion.

The All Share Index (ASI), the benchmark index at the NSE, declined by 2.1 per cent to close at 33,943.29 points as against its opening index of 34,657.15 points. With the exception of the NSE oil and gas index, which rose by 0.42 per cent to close at 381.73 basis points, all other major market indices closed on the negative. The NSE 30 Index, which measures the performance of the 30 most capitalised companies on the NSE, fell by 1.72 per cent to close at 1,536.30 basis points; the NSE Banking Index declined by 1.28 per cent to 346.88 basis points, while the NSE Insurance Index was down by 0.60 per cent to 148.74 basis points. Also, the NSE Lotus Islamic Index dipped by 2.65 per cent to close at 2,184.46 basis points, while the NSE Industrial Index closed with a loss of 2.82 per cent at 2,097.16.

Large-cap stocks led the bearish trading. Seplat Petroleum Development Company recorded the highes loss of N19.51 to close at N351.50. Nestle Nigeria dropped by N16.15 to close at N995.60. Dangote Cement declined by N10 to close at N190. Julius Berger Nigeria lost N3.03 to close at N57.63. Guinness Nigeria dropped by N2.85 to close at N165.30 while GlaxoSmithKline Consumer Nigeria lost N2.59 to close at N47.41.

Analysts at Afrinvest Securities said the bearish opening was in line with expectation as investors sought to take profit on the earlier rebound.

“Broadly, we expect the market will trade sideways with an overall bearish tone as contrarian investors continue to position in cheap value counters even as we expect simultaneous profit taking,” analysts stated.

Total turnover yesterday stood at 299.41 million shares valued at N5.46 billion in 3,807 deals. Ecobank Transnational Incorporated was the most active stock with a turnover of 97.39 million shares worth N1.80 billion in 72 deals.

January 6, 2015
Nigerian equities will remain bearish, say analysts

Nigerian equities will remain on the downtrend in the months ahead as quoted companies grapple with macroeconomic challenges and investors gauge the continuing impact of the declining crude oil price and political transition on the economic outlook.

Investment pundits said quoted equities would in the immediate months continue on the downward trend, although share prices may recover in the latter months of the year.

Nigerian equities lost N1.75 trillion last year, representing average full-year decline of 16.14 per cent.

Analysts at Bismarck Rewane’s Financial Derivatives Company (FDC) in their latest review stated that quoted equities would struggle with local and global challenges this year, leaving the market mostly on the negative in the first half.

“The Nigerian stock market may be in for a prolonged stay in the bear territory due to mounting global and domestic uncertainties. In 2015, a lower return trajectory is anticipated since the market is in for a bumpy ride and some companies would be left behind,” FDC stated.

According to analysts, the stock market is expected to dwindle further all through the first half and subsequently bounce back in the second half of the year.

Analysts noted that the likely increases in the United States and euro zone interest rates raises the threats of capital flow reversal and erosion of funds from the equity markets, which, in addition to growing macroeconomic risks, may result in a series of adjustments and prompt a cohesive movement of sectors and stocks prices.

“The year 2015 is expected to be a mixed year for the equities market as the outcome of a plethora of external and internal events unfold. A possible interest rate hike in the United States and the possibility of a sustained period of low oil prices are significant risks. The outcome of the 2015 elections would also determine investors’ participation and sentiments. The anticipated loosening monetary stance of the Central Bank of Nigeria (CBN) post elections will also have its impact on price and currency stability,” FDC stated.

They pointed out that returns in 2015 will depend on selecting the right companies in the right sectors, rather than relying on a broad-based approach that depends on the gathering momentum of the overall market position.

They said the performance of the market might be coloured by the general elections starting on February 14.

According to analysts, in addition to the global oil market dynamics, the prospects of the Nigerian economy in 2015 hinges on the electoral calendar, and this will mainly determine the macroeconomic outlook during the year.

“With stocks currently trading at their multi-year lows, we expect an upward trend in the beginning of the year. The anticipated loose monetary stance will be expected to channel additional liquidity to the stock market. However, Investors sentiment will be weighed down by political tensions leading to the 2015 general elections. The tension between the Peoples Democratic Party (PDP) and its major opposition All Progressives Congress (APC) is expected to lead to a lull in the equities market as investors, mostly foreign evaluate the electoral process and outcome whilst fearing post-election violence. Foreign portfolio investors are expected to remain wary of the local bourse until the elections are concluded and possible violent fallouts curbed,” analysts pointed out.

They noted that with oil prices projected to trend between $50-$70, the global crude price will be negative for the Nigerian economy and in turn the capital market, with the oil stocks expected to bear the brunt of declining oil prices given the thinning out of the sectors profitability.

Besides, analysts noted that as the US economy gains traction, there could be an increase in interest rates in 2015, which is expected to have a negative effect on emerging and frontier economies. This will lead to heavy portfolio reversals, as investors will opt for safety and security in a much developed market. This may lead to a selloff in local equities as foreign investors exit. However, this may be cushioned by increased participation of local investors as stocks become increasingly attractive.

“The state of security in the country especially in the north eastern part of Nigeria continues to be worrying. Its effect continues to weigh on the profitability of consumer goods companies as consumer spending in these areas remains weak. It has also in-creased the cost of doing business in these areas. Profits that will be declared, if any, in the financial year 2014 by most companies are likely to be below investors expectation. Most sectors; banking, consumers, oil and gas, conglomerates will not be insulated,” analysts said.

Analysts said the macroeconomic outlook will likely change significantly depending on the outcome of the general elections, pointing out that 2015 will be distinctly divided into different phases including pre-election phase, handover phase and post-election phase.

In the pre-election phase, policymaking will be overshadowed by political campaigns and the elections in this period. As a result, most macroeconomic indicators are likely to be influenced by speculative market activities to hedge any unfavourable outcome. The intensity of political activities towards the election could increase security concerns and result in the hike of consumer prices, dampen economic output as well as growth. This is likely to have negative impact on investors’ confidence and increase dollar demand pressure.

Analysts noted that the immediate period after the elections would still be overshadowed by concerns as parties debate the election results. These challenges will likely affect the macro environment and policies options while the level and intensity of uncertainties will heighten the level of insecurity in most part of the country. Hence, movement and transport of goods and services become difficult leading to an uptick in the inflation rate to above 10 per cent and poor economic output. Investors’ confidence is likely to also decline and lead to an increase in currency pressures as the naira slides to N190-195/$ at the interbank market.

“In general, the Nigerian macroeconomic environment is expected to be mixed and highly influenced by developments in the global oil and financial markets. However, the medium and long term prospects of the Nigerian economy depend on developments in the oil section, political events as well as enforcement of tax compliance to boost revenue,” analysts stated.

‘’One of the positives apart from the obvious that the Nigerian economy has to be less dependent on oil is that prices in the stock market may have hit rock bottom. Current stock prices appear attractive at the moment, but we advise cautious investing with a focus on long term value as opposed to speculating and searching for short term gains. We also expect some volatility over the coming months until after elections. A return to normalcy, the stability in oil prices and the Naira will return some calm to the markets’’.

January 5, 2015
GTI Securities, GTI Capital beat recapitalisation deadline

GTI Securities Limited and GTI Capital Limited had more than the minimum capital requirements for their capital market functions by the initial deadline of December 31, 2014.

A list of capital market operators that met the new minimum capital requirements for their various functions published by the Securities and Exchange Commission (SEC) showed that GTI Securities and GTI Capital were among the operators that met the earlier deadline of December 31, 2014.

GTI Securities Limited, a member of the Nigerian Stock Exchange (NSE), is a broker-dealer member of the GTI Capital Group while GTI Capital is an issuing house.

SEC last week extended the deadline for compliance with the new minimum capital requirements for capital market operators to September 2015.

The management of GTI Capital Group at the weekend indicated that the confirmation of the capital base of both GTI Securities and GTI Capital by SEC underscored the financial strength of the financial services group.

GTI noted that it would continue to improve on its bespoke services to cater for the needs of the investing public.

In a statement, the management of the securities firm said the company is poised to serve the investing public better with more customer-centred products and services and efficient communication system.

It noted that GTI Securities, a member of the GTI Capital Group, is focused on its core competence of trade execution and advisory and it has been positioned for greater market penetration and enhance strategic focus in stockbroking business.

“The new and transformed GTI is now poised to serve you better, as it is founded on the principles of financial possibilities for all your investment requirements and we are committed to ensuring that you fully maximize the rewarding investment opportunities present in the capital market through our formidable research team,” the investors’ note stated.

According to the company, part of its value-added investment services included improved research reports, which provide daily market insights and regular business and economic news, stock analysis and recommendations and sectoral reports which give clients insights into the various sectors of the economy and assist them in making informed investment decisions.

“We also offer free investment advisory. As a valued client, we will be willing to meet with you, at any point in time, to plan your investment portfolio across various assets classes based on your needs and in line with your investment objectives. We will also from time to time, be contacting you on your investment portfolio, to ensure proper re-alignment for improved profitability,” the firm stated.

The statement pointed out that GTI Securities’ online trading platform gives investors direct access to the market for online trading and real time monitoring of the market and their portfolios.

It added that it has provided dedicated mandate and customer service lines that provide direct access to customers to promptly place their orders, make enquiries and get feedback on their portfolios.

GTI Securities noted that all members of GTI Capital Group are well capitalised above regulatory benchmarks.

Located on Tinubu Street, in the Marina axis of Lagos’s main Central Business District, the GTI Securities’ private trading floor is a multi-purpose trading floor designed to interface with the most modern trading engines around the world, providing stockbrokers on both sides direct trading opportunity. Already linked and trading online, real time, on the Nigerian Stock Exchange (NSE) and NASD OTC Plc, the private trading floor is concluding arrangements that will open up similar trading opportunities on the LSEG, New York Stock Exchange (NYSE) and other major exchanges.

As a broker-dealer member of the NSE, GTI is also part of the West African Capital Market Integration (WACMI) programme, which is designed to integrate the region’s stock exchanges. The WACMI programme, at full implementation, will enable stockbrokers from any West African country to trade on any of the region’s exchanges and also allow companies to raise capital across the borders. GTI Securities’ private trading engine is designed to trade on all instruments including equities, bonds and derivatives.

A team from the London Stock Exchange Group (LSEG) recently visited the GTI Securities’ trading floor with a promise to work together with the Nigerian firm to further integrate the Nigerian capital market and the global financial markets.

Chief of staff and head of international development, London Stock Exchange Group (LSEG), Mr. Nikhil Rathi, had commended GTI’s vision of seamless facilitation of capital flow and investments between Nigerian and global financial markets.

According to him, GTI’s vision of bringing Africa to the world and bringing the world to Africa is a commendable and noble vision that would lead to development of the Nigerian capital market and the economy.

Co-Head of Emerging Markets and Head of Primary Markets, London Stock Exchange Group (LSEG), Mr. Ibukun Adebayo, noted that Nigeria, as the largest economy in Africa, has huge opportunities and enormous potential for the development of its capital market and the economy.

He pointed out that Nigerian capital market is still a fraction of the country’s Gross Domestic Products (GDP) whereas it should have been in multiples of the GDP.

He said the LSEG team, which had visited and signed Memorandum of Understanding (MoU) with the NSE, was in Nigeria to facilitate dual listing and greater connectivity between Nigeria and London.

January 5, 2015
Stock Exchange extends deadline for Dangote Cement’s capital restructuring

The Nigerian Stock Exchange (NSE) has granted Alhaji Aliko Dangote, the core investor in Dangote Cement (Dancem) Plc, a two-year extended timeline to reduce his majority shareholding in Dancem in order to deepen public participation in the shares of the cement company.

The NSE had earlier given Dancem October 2014 to comply with listing regulations that require all quoted companies to have minimum free float of 20 per cent. The management of Dancem had applied and presented compliance plan based on which the NSE approved compliance deadline of October 2014 for the company.

The Nation’s check indicated that NSE has extended the deadline for Dancem to October 2016, following the failure of Dancem to meet the October 2014 deadline.

Dancem’s free float, according to NSE official document, remains below free float benchmark at 9.07 per cent, implying that Aliko Dangote’s Dangote Industries Limited (DIL) may have to sell some 10.93 per cent equity stake to the general investing public.

DIL had earlier sold some equity stake to improve Dancem’s free float from a low of 4.93 per cent to the current position of 9.07 per cent. The South Africa’s government, through its wholly owned investment company, Public Investment Corporation of South Africa (PIC), had acquired 255.61 million ordinary shares of 50 kobo each of Dancem.

By the expiration of the October 2016 deadline, Dancem is mandatorily required to have completed partial divestments or dilution of the core investor’s shareholdings to free 20 per cent equity stake for public holding, unless the management of the NSE grants fresh waivers and extensions for the companies. In the extreme instance, a company with deficient public float may opt to delist its shares.

The reduction in shareholding is to enable Dancem to comply with the free float rule at the NSE. Companies listed on the NSE are required to maintain a minimum free float of 20 per cent and 15 per cent for companies on the main board and second tier board respectively. Dancem is quoted on the main board. It is NSE’s most capitalized stock.

Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation. Besides, it provides the general investing public with opportunity to reasonably partake in the wealth creation by private enterprises.

Six other companies are also expected to comply with their scheduled deadlines for improvement of their free floats to 20 per cent. These included Nigerian Insurance (GNI) Plc, Chellarams Plc, Nigerian Ropes Plc, Union Bank of Nigeria (UBN), Capital Hotel Plc and Aluminium Extrusion Industries Plc.

NSE’s report indicated that GNI currently has 16 per cent of its issued shares in the hands of the general investing public while Chellarams and Nigerian Ropes has 5.20 per cent and 13.96 per cent respectively. Capital Hotel currently has 2.23 per cent of its issued shares in the hands of the general investing public, implying that the core investors will need to sell down about 17.77 per cent to the general investing public or undertake a dilution through new capital issue. Union Bank has a free float of 13.98 per cent while Aluminium Extrusion Industries has 17.55 per cent.

According to the report, the management of the NSE has given GNI a deadline of July 8, 2016 while Aluminium Extrusion Industries and Nigerian Ropes will have to complete their share restructurings by March 2015 and January 7, 2015 respectively. Also, Capital Hotel has a deadline of April 20, 2016 to complete the share restructuring. Union Bank of Nigeria has up till June 2017 to improve its free float.

January 5, 2015