The Nation Newspaper

Tag: Index

  • NSE launches corporate governance index

    NSE launches corporate governance index

    The Nigerian Stock Exchange (NSE) has launched a Corporate Governance Index (CG Index), which will track the performance of prequalified companies, using their market capitalisation, free float and corporate governance rating scores.

    The CG Index will be reviewed on a bi-annual basis at which point other companies that have met the requirements may be added to the Index or companies that have had their ratings suspended or withdrawn may be removed.

    The Index is expected to be an important tool for investors keen on investing in well governed companies as well as corporates eager to distinguish themselves on the ground of governance.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said the new index will increase transparency in the capital market and provide investors additional data points to make well-informed investment decisions.

    “The launch of the CG Index is an important milestone to strengthening listed companies by tracking their corporate governance practices. This index will increase transparency in our market and provide investors additional data points upon which to make sound decisions.

    “I congratulate the companies that have successfully completed the process and I expect that they will be more positively looked at whilst trying to raise and access capital within or outside of our jurisdiction,” Onyema said.

    He pointed out that sound corporate governance practices will lead to higher economic performance, provide more sources for capital investment and increase the creditability of shareholders.

    “The NSE CG Index is highly correlated with other NSE Indices. By far, the highest correlation coefficient was recorded with NSE 30 Index at 99.6 per cent and closely followed by the NSE All Share Index (ASI) at 99.3 per cent. In essence, all indices moved in tandem in nearly all cases. The observed correlation between the CG Index and ASI reinforces observed trend in some emerging markets, including Brazil, China and Italy. It can, therefore, be inferred that companies that determine the direction of the ASI in these markets are mostly companies with good corporate governance practices,” Onyema said.

     

  • Recession pushes up Nigeria’s misery index

    The economic recession has pushed up Nigeria’s Misery Index to an all-time high of 49.5 per cent, making her the fourth most-miserable country in the world, the Managing Consultant, Starteam Consult, Mazi Sam Ohuabunwa, has said.

    Misery Index is a measure of the economic well-being of citizens of a specified economy, computed by taking the sum of the unemployment rate and the inflation rate for a given period. An increasing index means a worsening economic climate for the economy in question, and vice versa.

    Nigeria’s Misery Index as at August, stood at 47.7 per cent, according to the National Bureau of Statistics (NBS). But Ohuabunwa, an industrialist, said this had risen to 49.5 per cent, making Nigeria the fourth most miserable country in the world.

    The former Chairman of Ikeja branch of Manufacturers Association of Nigeria (MAN) spoke on the sideline of the 49th Annual General Meeting (AGM) of Ikeja branch of MAN  in Lagos, on Tuesday, last week.

    It was titled: “Vibrant diversified economy: panacea to economic recovery.”

    Ohuabunwa lamented that Nigeria’s macro-economy has been in disequilibrium since the crash in crude oil prices, fall in capital importation, and sustained decline in foreign reserves pushed the economy into recession.

    “That our economy is in recession has been established and the symptoms are crystal clear,” he said, pointing out, for instance, that while inflation rate remained high at 18.3 per cent, interest rate has grown to as high as 14 per cent.

    Ohuabunwa also pointed out that the country’s rising Misery Index was reflected in the increased unemployment/poverty rate, loss of global competitiveness, and extremely high exchange rate of N310/$1 versus N475/$1 at the parallel market.

    He said because of the aforementioned unenviable statistics, market realities indicate that “there is market contraction due to decline in consumer purchasing power, increasing credit defaults, declining corporate sales and profitability, growing corporate atrophy, morbidity and mortality, among others”.

    Ohuabunwa attributed the economic crisis to carelessness. He said: “We left our economy unattended to for a long time, ‘’ adding: ‘’The administration’s policies are either not properly sold or not clearly understood by the international community.’’

    He said this was partly why Nigeria lost her global competitiveness, occupying the position of 169 out of 189 on the Ease of Doing Business Index. “We are not globally competitive,” the industrialist lamented, adding that this was why the cost of manufacturing products in Nigeria is high.

    Apart from the loss of global competitiveness, Ohuabunwa said  Nigeria’s foreign reserves have declined. ‘’The reserves were at $28.33 billion at end of June 2015, compared with $34.24 billion, representing a decline of 17. 3 per cent. It further decreased to $23.950 million in October 2016, from $24.590 in September 2016.

    “Previous data on the reserves showed that they increased marginally by $40 million in March on a 30-day moving average basis to $27.9 billion and have continued to record marginal decline till current position.”

    To get out of recession, Ohuabunwa  emphasised that Nigeria should  focus on agriculture and manufacturing. “The surest way of working ourselves out of this recession and perhaps never to return to it again is to advocate a single-minded focus on manufacturing-production through value addition.

    “If Nigeria pursues a determined manufacturing policy, most of our current economic challenges -high unemployment, high inflation, high exchange rate etc will abate, he said, adding that since the decline in productivity was at the core of the recession, there was need to ramp up production.

  • Bearish trading at NSE, index drops

    Bearish trading at NSE, index drops

    It was a mixed grill as bears took over trading at the Nigerian Stock Exchange on Friday, depressing the All Share Index and market capitalisation.

    The major positive was in the volume of shares traded. It grew  by 34.95 per cent, as investors staked N1.21 billion on 151.85 million shares transacted in 2,902 deals.

    The News Agency of Nigeria (NAN) reports that this was in contrast with the volume  of 112.52 million shares valued at N2.36 billion traded in 2,684 deals on Thursday.

    The All-Share Index shed 62.76 points or 0.23 per cent to close  lower at 26,981.60 compared with 27,044.36 recorded on Thursday.

    Also, the market capitalisation lost N1 billion  to close at N9.288 trillion against N9.289 trillion posted on Thursday.

    Sterling Bank emerged the most traded stock, accounting for 33.67 million shares worth N27.62 million.

    It was trailed by Zenith Bank with an exchange of 24.21 million shares valued at N359.41 million.  FBN Holdings traded 20.23 million shares worth N61.70 million.

    UBA sold 18.74 million shares valued at N80.49 million. Access Bank posted a turnover of 9.58 million shares worth N53.71 million.

    NAN also reports that major blue chips posted price losses with Seplat leading the losers’ table having lost N19 to close at N361 per share.

    Total came second with a loss of N16.62 to close at N315.88, while Guaranty Trust Bank shed 93k to close at N22.57 per share.

    Nigerian Breweries was down by 86k to close at N142 and Zenith Bank declined by 30k to close at N14.80 per share.

    On the other hand, Nestle led the gainers’ table with a gain of N19.96 to close at N814.94 per share.

    Larfarge Africa garnered N5.08 to close at N54.88 and Flour Mill increased by 70k to close at N19.70 per share.

    Air Service rose by 20k to close at N2.54, while AfriPrudential Registrar advanced by 12k to close at N2.60 per share. (NAN)

  • Nigeria’s exit from bond Index ’ll hurt external reserves, says economist

    What are the consequences of global agency JP Morgan’s delisting of Nigeria from the Emerging Market Bond Index (EMBI)? The action will threaten Nigeria’s $31 billion external reserves and also hurt its financial and economic rating, says an economist, Mr. Tilewa Adebajo.

    In a report obtained by The Nation, Adebajo, CEO, CFG Advisory, said the cost of borrowing would increase, noting that access to the international financial markets for sovereign and corporate entitles will be limited.

    The exit, Adebajo argued, would stem the inflow of portfolio investments which peaked at $20.5 billion in 2013.

    JP Morgan’s EMBI, with around $210 billion in assets under management, is the most widely used and comprehensive emerging market sovereign debt benchmark. Nigeria was added in the index in 2012 when liquidity was improving, making it the second African country after South Africa to be included.

    “To state the obvious, the lack of articulation on policy and economic direction by the new government is not helping matters and is unsettling the financial markets. Time is money. And in the fast emerging global fiscal order, lost time and opportunities may never really be regained,” he said.

    Adebajo said the government’s next challenge is the validation and structured financing plan for the current fiscal deficit, estimated at N6.5 trillion.

    “The government’s actions on the fuel subsidy could significantly increase this figure. With the restructuring and swap of state government commercial bank loans into Treasury Bonds, the new government has increased the domestic debt profile by N1 trillion overnight. Unfortunately, state governments have not been compelled to execute conditional covenants, such as adhering to the tenets of the Fiscal Responsibility Act, which stipulates provisions for fiscal discipline,” he said.

    He said with a $49 billion domestic debt and $10.8 billion external debt overhang, Nigeria is now committing 23 per cent of its fiscal revenues to servicing debt.

    “With the levels of projected fiscal deficit, we might exceed the revenue-to-debt service best practice benchmark of 25 per cent by year end. The alignment of fiscal and monetary policy which the economy benefitted from over the last five years seems to, have been lost over the last several months,” Adebajo said.

    “Nigeria’s financial intermediation rates at 25 per cent cannot support productive investment and development; it will also stunt economic growth. Major reforms are therefore required in the banking system to support single digit rates. Banks also have to better deploy technology to reduce and manage costs. Their productivity and efficiency levels will consequently improve leading to a more competitive financial services sector.

    “Beyond the macro economy, we need to do a critical reappraisal of our trade and investment policies needed to ensure that they are properly integrated into the global value added system,” he said.

    “Beyond the macro economy, we need to do a critical reappraisal of our trade and investment policies, we need to ensure they are properly integrated into the global value- added system. The domestic gains and success we have had in the cement sector with import substitution and backward integration has primarily been, driven by an individual and unfortunately not yet replicated, nor institutionalised in other critical sectors such as agriculture, another potential engine room of Africa’s political economy considering its huge social development and value chain effect.

    “Drastic attention also needs to be paid to Customs and Excise reforms and management to ensure proper implementation of Trade Policy, Industrial Development and Investment. The corruption menace of duty waivers, duty evasion, smuggling and weak import documentation also continues to affect the naira, clearly disrupting and discouraging industrial development, investment and expansion.”

     

  • Business confidence index dips

    Business confidence index dips

    The first quarter of the year aggregate Business Confidence Index (BCI) dropped from the 30 per cent it posted in fourth quarter of last year to 22.3 per cent.

    This represents a 7.7 per cent slack of the confidence level among business operators over the last three months, says Lagos Chamber of Commerce and Industry (LCCI) latest report.

    The report said it represents the largest quarter on quarter point drop of the BCI score over the last three years. The report signed by LCCI Director- General, Mr. Muda Yusuf, said conventionally, movement of the BCI score by up to five points indicates the presence of significant positive or adverse development in the country’s economic and business environment.

    He, however, regretted that the drop of the BCI scores at this time suggests that business leaders are largely pessimistic about expanding their business and investment spending over the next few months.

    It is worse with indigenous manufacturers as growth in the sector shrank by 19.2 per cent in the fourth quarter of last year, according to data by the Manufacturers Association of Nigeria (MAN).

  • NSE’s index hits 36,000 points

    Index at the Nigerian Stock Exchange (NSE) appreciated by 0.64 per cent to reach a new high of 36,000 points.

    The All Share Index (ASI), which tracks prices of all quoted equities, appreciated by 228.19 points to close at 36,010.28 points while the market capitalisation grew by N73 billion to close at N11.513 trillion.

    Investors yesterday staked N4.593 billion on 315.725 million shares in 5,880 deals. This was as a result of the good performances of some highly capitalised stocks and good corporate actions of some companies that recently released their results.

    The financial service sector remained the toast of investors with 240.538 million shares worth N2.267 billion across 3,189 deals. Ninety per cent of the top 10 most traded stocks were in the financial services sector. Seventy per cent of it was in the core banking sector while mortgage carriers, brokers and services sector and other financial institutions shared 20 per cent. The remaining ten per cent of the most traded stock was in the services sector.

    UBA emerged the most traded equity with 48.774 million shares valued at N380.198 million. It was followed by FBN Holdings, which accounted for 30.303 million shares worth N608.251 million, while Unity Bank sold a total of 22.915 million shares.

    Others on the list were ETI, Skye Bank, Guaranty Trust Bank, Resort Savings & Loans, Diamond Bank, Access Bank and C & I Leasing with 20.658 million shares, 20.367 million shares, 16.962 million shares, 15.185 million shares, 14.077 million shares, 9.882 million shares and 9.843 million shares respectively.

    In all, 118 stocks recorded price change with 35 appreciating, 25 reducing in value and the remaining 58 closing flat.

    Berger paints led the gainers’ chart, adding N0.75 to close at N8.25. It was followed by Cutix with a price increase of N0.19 to close at N2.11. Others were Cadbury Nigeria, Total Nigeria, Courtville, UBA, RT Briscoe, UAC-Property, Flour Mills of Nigeria and Presco.

    On the losers, table, Paints Manufacturing Company led with a drop of N0.16 to close at N1.46. It was followed by Academy Press with a price drop of N0.18 to close at N1.67. Also on the table were May & Baker, Costain, Ikeja Hotel, Wema Bank, UTC, Japauloil, ABC Transport and Prestige among.

     

  • NSE moves trading index

    Another index is on the way to bring the total number of indices to seven.

    The Nation at the weekend confirmed from a source close to the Nigerian Stock Exchange (NSE) that NSE 50 will be the new addition to the family.

    These include NSE 30, NSE LII while the remaining four are sectoral indices which include NSE Consumer, NSE Banking, NSE Insurance and NSE Oil & Gas.

    According to the source, NSE 30 and NSE 50 will have the top 30 and top 50 equities each with different criteria to justify their position. But the possibility of having all or most of the stocks in the top 30 equities reappear in the top 50 equities cannot be ruled out.

    It would be recalled that 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 the four sectorial indices with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors. The sectorial indices comprise of the top most capitalised and liquid companies in the sector.Just last month, as a prelude to the year-end review of The NSE 30 Index and other Sectorial Indices, the Index Committee of The NSE undertook a pseudo-review of the indices and released the names of the likely incoming and exiting equities.

    The composition of the indices became effective on Wednesday, January 2, 2013.The pseudo review of NSE 30 and Sectorial indices, which is done twice yearly in June and December is a run-up to the actual review to be undertaken at respective month ends.

    According to the committee’s recommendation, the number of stocks comprising the NSE Consumer Goods Index increased from 10 to 15; NSE Insurance Index increased from 10 to 15 while the NSE Oil/Gas Index increased to 7 stocks as against the 5 it initially operated with.

    The NSE 30 Index and the NSE Banking Index retain their 30 stocks and 10 stocks respectively. Reason given was to allow for adequate portfolio diversification.

     

     

    The breakdown of the likely composition of the indices shows that the NSE 30 Index have Glaxo Smithkline Consumer Plc; Union Bank of Nigeria Plc; International Breweries Plc; Julius Berger Nigeria Plc; 7-UP Bottling Co. Plc and Sterling Bank Plc replaced Law Union & Rock Ins. Plc; Transnational Corporation of Nig. Plc; National Salt Co. of Nig. Plc; Oando Plc; Dangote Flour Mills Plc and Mobil Oil Nigeria Plc.

    Under the NSE Consumer Goods Index, International Breweries Plc; National salt; Honeywell Flour Mills Plc; Vitafoam Plc; UTC Plc; Multi-Trex Integrated Foods Plc and Northern Nig. Flour Mills Plc replaced 7-Up Bottling Plc; Cadbury Nigeria Plc; Dangote Flour Mills; Unilever Nigeria; PZ Cussons Nigeria Plc; Dangote Sugar Refinery Plc and Flour Mills of Nigeria Plc.

    The NSE Banking Index has Union Bank; Diamond Bank; Sterling Bank Plc; Unity Bank Plc and Wema Bank Plc to replace FBNH; Stanbic Holdco; Fidelity Bank Plc; First City Monument Bank Plc and Skye Bank Plc.

    Niger Insurance Plc; Cornerstone Insurance Plc; Standard Alliance Ins. Plc; Lasaco Assurance Plc; Sovereign Trust Insurance Plc; Linkage Assurance Plc and Prestige Assurance Plc to replace The Insurance Index while Unity Kapital Assurance Plc; Mutual Benefits Assurance Plc.; Goldlink Insurance Plc; Aiico Insurance Plc; Wapic Insurance Plc; Continental Reinsurance Plc and Mutual Benefits Assurance Plc.

    The NSE Oil/Gas Index has MRS Oil Nigeria Plc; Japaul Oil & Maritime Services Plc; Eterna Plc; Beco Petroleum Products Plc also replaced Forte Oil Plc; Conoil Plc; Mobil Nigeria and Oando Plc.

     

     

     

  • ‘Nigeria ranks 120 in Index of economic freedom’

    ‘Nigeria ranks 120 in Index of economic freedom’

    NIGERIA has been ranked 120 out of 177 countries in the 2013 Index of Economic Freedom. The index is published yearly by The Wall Street Journal and the Heritage Foundation.

    According to the Index, after a slight improvement in previous ranking, Nigeria slipped -1.2 and ranks as mostly unfree in the economic freedom ranking.

    The Sub-Saharan Africa’s overall level of economic freedom “remains weaker than that of any other,” the Index editors write. A majority of countries in this region either fall into the Index’s “mostly unfree” or “repressed” categories. Indeed, 15 of the world’s 33 “repressed” economies are in Sub-Saharan Africa, and 22 are in the next lowest, “mostly unfree” category, the report added.

    It noted that Sub-Saharan Africa continues to lag far behind the five other regions of the world in overall economic freedom.

    According to the report, Mauritius remains in the top 10 in annual worldwide rankings-the only one of 48 Sub-Saharan countries to do so. But while it is first for the region, its Index score declined slightly from last year.

    Second-place Botswana, meanwhile, moved from “moderately free” to “mostly free” by adding one full point to its score. At third place, Rwanda halted two consecutive years of progress by shaving eight-tenths of a point off its score, according to the report.

    Burkina Faso slipped to “mostly unfree.” Sào Tomè & Prìncipe and Ethiopia are now considered “repressed.” But several countries showed improvement, with Zimbabwe reporting the best increase by moving up 2.3 points to 28.6. Benin and Seychelles, according to the report, both added almost two full points to their Index scores; Gabon added 1.4. Yet all three remain mired in the “mostly unfree” category, which shows how far the region has to go.

    “It is dead last in seven of 10 measures of economic freedom and collectively scores about 13 points behind average world scores in business freedom and more than 10 points behind in property rights and freedom from corruption.

    “Nigeria continues to ranks low in the Index of Economic Freedom because of the increasing role of government within the economy,” said Thompson Ayodele, director, Initiative for Public Policy Analysis.

    He said: “The government spending has increased. We have continued to spend unearned money. Government borrowing has also crowded out private borrowing in the economy while debts owed-local contractors have ballooned. Ironically, government seems to think that more borrowing is the answer to our economic problem.

    “The private sector, particularly small business, still remains engine of growth in the economy. Since the beginning of this administration Nigeria has resorted to more borrowing while other loans are in the pipeline. We cannot borrow our ways to prosperity. Should we continue in this trend, Nigeria is surely on the road to Greece,” Ayodele said.

    Launched in 1995, the Index evaluates countries in four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on its aggregate score, each of 177 countries graded in the 2013 Index was classified as “free” (that is, combined scores of 80 or higher); “mostly free” (70-79.9); “moderately free” (60-69.9); “mostly unfree” (50-59.9); or “repressed” (under 50).

    The world average score of 59.6 was only one-tenth of a point above last year’s average. Since reaching a global peak in 2008, according to the Index, economic freedom has continued to stagnate. The overall trend for last year, however, was positive: Among the 177 countries ranked in the 2013 Index, scores improved for 91 countries and declined for 78.

    In many countries, average government spending scores improved. Unfortunately, this was matched by a decline in regulatory efficiency, as a number of countries hiked minimum wages and tightened control of labour markets.