The Nation Newspaper

Tag: NSE

  • Empower indigenous operators, says NSE chief

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, said indigenous operators need financial support to move into new areas and explore opportunities in the oil and gas sector.

    Speaking at the Annual General Meeting of the Financial Markets Dealers Association(FMDA) in Lagos , Oscar said, indigenous firms need to explore opportunities offered by the capital market to invest in upstream assets.

    According to him, several local firms have are posed to make significant investments in marginal fields and seize opportunities to participate in the oil and gas business.,

    He said indigenous oil and gas producers need to meet some conditions to develop marginal fields and also boost indigenous production.

    He said the capital market is favourable for oil and gas companies, adding that financially robust companies are reducing debt, increasing the capital available for other companies.

    Consequently, he said the Nigerian Stock Exchange (NSE) is engaging marginal oil field operators and other indigenous oil and gas firms to use the capital market to source funds. He said the market provides patient capital that is well suited to capitalize these opportunities and assist a new generation of oil and gas value creators to achieve their potential.

    Onyema said the NSE was also considering opportunities inherent in the Local Content Development Act to encourage Nigerian-owned oil and gas firms to list their shares.

    He expressed hope that the passage of the Petroleum Industry Bill(PIB) will enable other subsidiaries of the Nigerian National Petroleum Corporation(NNPC) to be listed separately . He noted that the government needs to encourage companies to list on the NSE through incentives and amenable legislations.

  • Equities make N1.93t gains in 11 months

    •Bulls hit homestretch

    Investors in the equity market have in the past 11 months gained more than N1.93 trillion in capital appreciation as market considerations of quoted companies surge towards their best closing in recent years.

    Despite substantial profit-taking in November, equities surprised many analysts’ predictions of a slowdown with modest gains in the 11th month, pushing the year-to-date return for the period to N1.933 trillion.

    Total market value of quoted equities on the Nigerian Stock Exchange (NSE) closed November at N8.466 trillion, indicating an increase of N43 billion during the month. The All Share Index (ASI), the benchmark index that tracks changes in prices of quoted companies, underlined the positive pricing trend with a modest increase of 0.24 per cent to close at 26,494.44 points.

    Aggregate market capitalisation and ASI had opened November at N8.423 trillion and 26,430.91 points. Both key indices had opened this year at N6.533 trillion and 20,730.63 points respectively.

    The modest gain in the 11th months pushed the year-to-date return at the NSE to 27.8 per cent, underlining the attraction of equities as a real-yield instrument. The Monetary Policy Rate, the benchmark interest rate set by the Central Bank of Nigeria (CBN), stands at 12 per cent while inflation rate stands at 11.7 per cent.

    Fixed-income rates generally showed out equities’ return as substantially attractive. Three-month tenor deposit rate of banks stands at 8.69 per cent, 91-day Nigerian Treasury Bill (NTB) carries 12.4 per cent while average monthly prime lending rate currently stands at 16.48 per cent.

    The performance of the stock market was swelled by impressive bullish run in the third quarter, which scooped N1.4 trillion capital gains to investors during the three-month period.

    The third quarter posted the biggest rally in recent periods with a quarterly return of 20 per cent during the three-month period ended September 30, 2012. Total average year-to-date return then closed the period at 25.47 per cent.

    Aggregate market capitalisation of all equities, which had opened the third quarter at N6.895 trillion, closed the period at N8.282 trillion. This represented an increase of N1.39 trillion. The ASI jumped from its index on board of 21,599.57 points to 26,011.64 points, an increase of 20.43 per cent.

    The market had closed the first half with a marginal gain of 4.19 per cent. ASI closed the first half at 21,599.57 points as against its year opening index of 20,730.63 points. Aggregate market capitalisation of all quoted equities also showed modest increase of 5.54 per cent at N6.895 trillion by June compared with its value on board of N6.533 trillion for the year.

    The market had closed the first quarter with a negative year-to-date return of 0.38 per cent as declines in share prices of highly capitalised stocks overwhelmed the market situation. ASI closed first quarter at 20,652.47 while aggregate market capitalisation of all equities closed the first three months at N6.550 trillion.

    The bullish rally has re-infused confidence into the stock market and set out the market for its biggest gain in the past five years.

    Market value of all quoted companies had dwindled by N1.38 trillion in 2011 as uncertainties in the banking sector and monetary tightening policies of the CBN deflated initial optimism that had seen the market with double-digit gain in the early part of the year.

    Aggregate market capitalisation of all quoted equities slumped to N6.533 trillion at the end of last trading session for 2011 as against the year’s opening value of N7.914 trillion. The ASI fell to 20,730.63 points from its 2011’s value-on-board of 24,770.52 points. Altogether, the benchmark index indicated a negative return of 16.31 per cent, which translated to almost N1.4 trillion loss.

    The downtrend in 2011 had been pervasive as all other key group indices showed negative returns. From the petroleum-marketing sector to banking, insurance and food and beverages sectors while the bears rattled all cadres of stocks from penny stocks to mid-cap and high cap stocks.

    The upswing in 2012 has also been pervasive and market-wide with key group indices showing double-digit returns. The NSE 30 Index, which tracks the 30 most capitalised stocks, showed 11-month year-to-date return of 36.24 per cent; the NSE Consumer Goods Index posted 33.68 per cent while NSE Banking Index returned 11.19 per cent. But the beleaguered oil and gas and insurance sectors remained under sell pressures with negative returns of -29.32 per cent and -20.53 per cent.

  • NSE looks for first IPO for primary market

    The Nigerian Stock Exchange (NSE) is looking for a major initial public offering (IPO) that will signal the beginning of recovery at the primary market.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, said the floatation of an IPO by one of the prospective issuers would send a message about the full recovery of the capital market, with the resume of activities at the primary market complementing robust recovery at the secondary market.

    He said NSE has engaged several quotable companies for the benefits of listing their shares on the stock market, adding that there were prospects for new listings in the period ahead.

    The Nation’s investigation had earlier shown that many companies that had shelved plans to raise new capital from the capital market due to the lingered recession have restarted discussions about prospects of accessing new equity funds from the market.

    Investment banking sources said there were indications of renewed interests in the new issue market following sustained recovery in the stock market, which has seen considerable restoration of equities’values and investors’confidence in recent period.

    They indicated that ongoing discussions could lead to making a debut of early new issues in the market around the first half of 2013 if the market sustained its ongoing recovery.

    Market sources said though the talks were still not definitive, the discussions pointed to imminent rebound of the new issue market.

    From a whooping N1.3 trillion in 2007, the recession that started in 2008 had withered enthusiasms for new issues, especially equities, as new issues dropped to about N86 billion in 2009. It has since declined consecutively with the few new equity issues in recent years largely rights issues motivated by large core investors seeking to recapitalise their companies.

    Companies were, however, said to be considering that the positive sentiments from the secondary market recovery would impact on new equity issues.

    Reports by boards of directors of several companies had indicated that firms were constrained by their inability to source new equity capital due to the melt down at the capital market while recourse to high-interest bank loans depressed probable returns to shareholders.

    Reports by quoted companies highlighted the twin-problem of high cost of fund and liquidity squeeze on corporate earnings.

    Several companies had earlier indicated plans for supplementary equity issues and initial public offering (IPO) but suspended the plans due to what they described as unfavourable situation at the primary market.

    Not less than 11 companies had earlier indicated interests in raising new equity funds. These included companies such as Cement Company of Northern Nigeria (CCNN), May and Baker Nigeria, Fidson Healthcare, RT Briscoe, DN Meyer, Nigerian Aviation Handling Company (Nahco), Lafarge Wapco Cement Nigeria Plc and UACN Property Development Company (UPDC) Plc.

    Two prospective new listings – Promasidor Nigeria Limited and Notore Chemical Industries Limited – had also mulled plans to float IPOs.

    Many banks were said to be considering proactive fund-raising plans to boost their lending capacity and forestall adverse impact from global and domestic regulatory changes.

    Many banks have subsisting shareholders’ resolutions to raise new funds through equity and debt issues.

    Most of the companies had already intimated shareholders of the necessity of accessing new funds while many have started and completed some key steps in the new issue process.

    While some of the companies plan to use net proceeds of their offers for business expansion, most of the companies would use the funds to restructure their balance sheets by reducing bank loans and providing additional working capital to support long-term growth.

    Already, CCNN had secured shareholders’approval to raise N45 billion.The company had received approval to raise N15 billion each through rights issue, public offer and a rights-based secured convertible debenture issue.

    This implied that the company would be seeking to raise up to N30 billion from existing shareholders while new investors and existing shareholders would contribute N15 billion.A secured convertible debenture would give opportunity to debenture holders to choose to convert their holdings to ordinary shares at a later date.

    Notore plans to raise more than N160 billion.The net proceeds from the IPO would be used to finance a brand new fertiliser plant, with a conservative estimated cost of $1 billion. The new fertiliser plant was part of the company’s expansion programme, which aimed to build new capacity to support the current attainable capacity of the existing plant of 750,000 metric tonnes.

    CCNN was planning to raise funds to finance expansion while Promasidor plans to use net proceeds of its IPOs to partly finance its new factory.

  • Nigeria needs N32t for infrastructure, housing

    The Federal Government requires N32 trillion to provide infrastructure and housing, the National Pension Commission (PenCom) and the Nigerian Economic Summit Group (NESG) have said.

    They made this known in a statement issued at the end of the Stakeholders’ Forum on Nigeria’s Pension System in Abuja.

    The highlights from the presentations and discussions at the forum indicated that Nigeria’s pension sector has 5.32 million registered contributors.

    PenCom said though there is N2.93 trillion in pension assets, with 5.3 million registered pension contributors, about 64 per cent of whom are below 40 years, only about 30 per cent of quoted stocks are active on the Nigerian Stock Exchange (NSE).

    The Commission also said about that same percentage meets the minimum criteria for pension funds investment and this is about 80 per cent of the trading in the market.

    It also said countries with large pool of funds have better developed economies, with developing countries holding only three per cent of long-term funds (LTFs) globally while developed countries hold 34 per cent and emerging economies hold the majority 63 per cent.

    It hinted that global LTFs range from a size of $300 billion in foreign direct investments to $3 trillion in private equity funds with Nigeria having 15 per cent sub-optimal growth gap, going by the difference between nominal output growth of 22 per cent and real output growth seven per cent.

  • Stockbrokers explore mergers, acquisitions to boost business

    Amid fast-paced changes in the financial markets industry, stockbrokers have evolved self-induced business consolidation to enhance the competitiveness of the trade group and build up enormous capital and other resources needed to compete with foreign and domestic investment banking and advisory firms.

    Industry sources confirmed that stockbrokers, mainly founded on sole entrepreneurship, are, now more than before, open to discussions on mergers and acquisitions, giving the shrinking operating space for small firms in the industry.

    There are some 300 stockbroking firms trading at the Nigerian Stock Exchange (NSE). Stockbrokers earn barely four per cent as total brokerage on complete buy and sale stockbroking transaction.

    Although several stockbrokers are registered for other functions, such as corporate finance and investment advisory, they face strong competition from banks, insurance and other financial services companies who provide similar functions.

    The meltdown at the capital market, which has left the new issues market prostate since, has also ate deep into the income base of stockbrokers, who made more incomes acting as parties and agents to new issues. Under the rules of the Nigerian Stock Exchange (NSE), only a stockbroker can introduce a company for initial listing or facilitate supplementary listing of already quoted company.

    Two chief executives of stockbroking firms that have consummated their companies under a new brand confirmed to The Nation that they opted for merger to create synergies that would lead to a more profitable and stronger firm.

    According to them, the new company, which has been granted approval by the regulatory authorities, would play actively in key areas of the capital markets, especially fund raising while also exploring opportunities in the public sector.

    They noted that the combination of their capital, expertise and technologies has reinforced clients’ confidence in the company and would form the unique selling points in its branding campaign.

    A source indicated that several other firms were exploring similar consolidation or varied forms of cooperation, including entering into memorandum of understanding to form a consortium of independent firms that can jointly bid for and execute transactions.

    The source noted that though the risk-based capital requirement regime being proposed for the industry may still allow small firms, the convergence of foreign and domestic big players would continue to put pressures on small firms. Stockbrokers are required to have minimum capital base of N70 million.

    Already, only about 20 firms account for over two-thirds of trades at the NSE, with foreign-affiliated firms leading the list.

    Stockbrokers have also come under pressures from the debts overhang and liquidity crunch from the 2004-2008 market boom.

    Stockbrokers have been lobbying government to intervene and resolve the debt overhang and liquidity crunch.

    Former president, Association of Stockbroking Houses of Nigeria (ASHON), Alhaji Rasheed Yusuf, said the meltdown at the stock market has defied all solutions because the critical element of funding was missing.

    According to him, with banks not funding the market, apathy from local investors and the crisis in the advanced economies that has affected foreign investors, providing alternative funding mechanism to break the crunch within the stockbroking community becomes the most critical issue.

  • Fed Govt to list bonds on NSE’s official list

    The Federal Government has started discussions with the management of the Nigerian Stock Exchange (NSE) to list the values of the Nigeria’s sovereign bonds on the Daily Official List.

    The Daily Official List of the NSE carries the values of equities and equity-based indices. It only lists bonds without specifying their values. As such, the official list only presents the equity segment of the market.

    Director, Market Development, Debt Management Office (DMO), Patience Oniha, confirmed the discussions between the agency and NSE.

    She said the listing of values of bonds on the official list would provide a complete view of the capital market capitalisation, allowing stakeholders to determine the flow of funds between equities and debt issues.

    She noted that the listing was part of efforts being made by the government to develop a viable secondary market for bonds and to encourage retail investors to participate in trading in bonds.

    She pointed out that the listing would help to diversify investors’ base and enhance mobilisation of savings for developmental projects.

    She added the appointment of government stockbroker was aimed at creating a focal point for secondary trading mechanism for government bonds.

    The government had appointed Stanbic IBTC Stockbrokers as its stockbroker. This means it will provide prices for government bonds on the NSE and act as an intermediary between the DMO, the NSE, stockbrokers and other market players to ensure that all activities in sovereign bonds and other government securities that may be listed in future are effected smoothly.

    Stanbic IBTC Stockbrokers is a wholly-owned subsidiary of Stanbic IBTC Holdings Plc, a member of Standard Bank Group. It is reputed as the largest stockbroking firm in Nigeria with a market share of some 17.65 per cent of the value of shares traded in 2011.

    Chief Executive Officer of Stanbic IBTC Holdings, Mrs. Sola David-Borha, has said the appointment of Stanbic IBTC Stockbrokers as stockbroker to the Federal Government would translate into increased retail investors’ participation in both the primary and secondary markets of sovereign debts and ultimately help to deepen Nigeria’s bond market.

    According to her, a major step towards attaining this goal is to specifically address the peculiar requirements of the retail segment, part of which includes undertaking focused awareness campaigns to ensure that the investing public is well informed about the workings of the bond markets.

    She reiterated the company’s long-term commitment to facilitating stability in Nigeria’s capital market, and the financial services industry in general.

    “We identify and align ourselves completely with the strategic objective of this appointment. We know that it is a great responsibility and we are committed to increasing the pool of investors by addressing the retail segment and also to ensuring that the investing public is properly educated to understand the workings of the markets,” David-Borha said.

  • NSE targets marginal oil field operators, local content firms

    The Nigerian Stock Exchange (NSE) is engaging marginal oil field operators and other indigenous oil and gas firms to use the capital market to source funds and realise their locked-in values through listing of their shares.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, said the management of the NSE and marginal oil field operators have been discussing the prospects of listing and raising funds through the capital market.

    He said the NSE was also considering opportunities inherent in the Local Content Development Act to to encourage Nigerian-owned oil and gas firms to list their shares, in the true spirits of the Act.

    Onyema, who spoke at the FBN Capital Annual Investor Conference on efforts being made by the management of the NSE to deepen the stock market through new listings, said NSE has also made representation to the Bureau of Public Enterprises to make listing on the NSE as part of pre-conditions for the sale of unbundled power companies.

    He noted that the government needs to encourage companies to list on the NSE through incentives and amenable legislations.

    According to him, though companies could not be forced to list their shares on the stock exchange, fiscal and legislative incentives would encourage companies to seek listing on their own.

    NSE is scheduled to list Geo-Fluids Plc, an indigenous oil and gas services company. About 100 million shares of the company would be listed at N5 per share.

    Managing Director, Geo-Fluids Plc, Mr Ala Ibanibo, said listing of the company would enable it to attract investors and also distribute values to Nigerians.

    “We know the attributes and prospects of the capital market as a dependable vehicle for wealth creation in the long-term. Consequently, we believe that given the right regulatory and institutional frame work, the capital market will continue to be a very important catalyst for wealth preservation and that is why we are listing now regardless of the temporary challenges,” Ibanibo said.

    He expressed optimism on the performance of the company on the secondary market, noting that the listing price will be to the advantage of shareholders because the company has great potentials.

    He said the company would pay dividend for the business year, citing the third quarter performance.

    He assured that the company would comply with best practices and codes of corporate governance, pointing out that Geo-Fluids will be open and transparent for examination by shareholders, regulators and all other stakeholders.

  • The Palms, Shoprite’s developer to list on NSE

    The Palms, Shoprite’s developer to list on NSE

    Persianas Properties, the real estate firm behind high-brow The Palms Shopping Mall in Lagos, has concluded arrangements to list its shares on the Nigerian Stock Exchange (NSE).

    Persianas’s portfolio of real estate assets include the 11-acre The Palms Shopping Mall in Lekki, Lagos; Polo Park Mall, Enugu, Enugu State and two other world-class malls under construction in Kwara and Oyo states.

    Executive Director, Persianas Properties, Mr Mike Williams, who spoke alongside the Chairman of Persianas Group, Mr Tayo Amusan, confirmed the impending listing of the real estate company.

    Williams said the company would soon submit its application for listing to the NSE as it restructures its operations to meet international best practices and unlock values in its real estate assets.

    According to him, Persianas is working to meet regulatory and listing requirements, including compliance with the International Financial Reporting Standard (IFRS).

    He said the company would meet the management of the NSE to sort out certain peculiarities relating to the company as a real estate company.

    Williams added that the company has been positioned as an attractive investment to investors.

    He said as part of efforts to bring down costs, the company engages in direct procurement and construction of its properties.

    Meanwhile, Amusan has called on the government to put in place amenable policies that could stimulate the growth of the real estate market and create immense job opportunities for Nigerians.

    He said the Central Bank of Nigeria (CBN) should provide support for the development of the real estate sector and subsidise the costs of housing units by creating single-digit mortgages that could stimulate demand for properties.

    Amusan noted that improved demand for housing units and real estate properties would greatly reduce the high unemployment rate in Nigeria given the large number of people involved in real estate value chain.

    He pointed out that the double-digit high interest rate of between 20 and 30 per cent and short tenors of bank loans were unsuitable and stifling the growth of the real estate sector.

    The International Finance Corporation (IFC) recently announced plans to invest $124 million in the Persianas Group. The investment package consists of up to $74 million in equity provided by IFC, IFC ALAC Fund, and $50 million in debt provided by IFC.

    Persianas Group is expected to use the funds to further develop retail and mixed-use centres in major commercial cities in furtherance of its overall vision of a fully integrated design, property development, and asset management firm.

    IFC indicated that Persianas’ vision was to develop and list Nigeria’s first investment grade real estate portfolio.

    Underlining the attractiveness of the investment, IFC noted that the Nigerian real estate sector is expected to produce high growth in the medium-term driven by the recovering economy, and other high growth sectors of commerce, construction, telecommunications, and a recovery in the financial services sector.

    It pointed out that improved economic recovery would lead to demand for real estate product in all sectors in an environment where there is a dearth of quality stock of real estate and the market is undersupplied.

    To address Nigeria’s vastly underserved commercial property, it outlined that Persianas is undertaking a restructuring and expansion of its operations including building and development of new retail and mixed used centres, establishment and development of a professional asset management company and restructuring of the company’s balance sheet.

  • Analysts project 33% return on equities

    Analysts project 33% return on equities

    The stock market can brace through yuletide cash demand and profit-taking transactions to attain average full-year return of 33 per cent for 2012, market pundits have said.

    The benchmark value index for the stock market, the All Share Index (ASI) of the Nigerian Stock Exchange (NSE), opened this week with year-to-date return of 28.88 per cent.

    Analysts and advisors at leading investment firms said they expected the stock market to record its best performance in five years this year with full-year return expected between 27 per cent and 33 per cent.

    Investment advisors at Cowry Asset Management Limited, FSDH Securities Limited and GTI Capital Limited, among others, said the stock market would neutralise intermittent profit-taking dips and expected increase in demand for cash by the year end with upswings from bargain hunting and portfolio rebalancing as investors await full year returns of quoted companies.

    According to analysts, with the significant capital appreciation that delivered about N1.4 trillion capital gains in the third quarter, the market would witness a mix of bargainhunting and profit-taking in the remaining months, with the thin-edge going to the upside by the end of the period.

    Analysts at Cowry Asset said the release of companies’ third quarter results, particularly from banks and the continued influx of foreign portfolio investors may push the ASI beyond its current position.

    They noted that the expectations of final approval of the new Pension Fund Investment Guideline could trigger mild market rallies as Pension Fund Administrators rebalance their portfolio store flect new threshold.

    Investment advisors at FSDH said the macroeconomic developments in Nigeria and initiatives in the equities market should further drive the equities performance in the remaining period of the year.

    “Our expectation is hinged on the premise that most companies’ results released up till date have shown improved performances with wide margins against previous years. Albeit there are some challenges which may adversely impact the market, we are of the opinion that the equities market will close year 2012 remarkably better than it recorded in the last five years,” FSDH stated.

    Analysts said they expected the ASI to achieve a growth rate of 25.46 per cent in the second half of the year, thus nudging the full-year return to 32.05 per cent.

  • NSE donates software to 12 varsities

    The Nigerian Society of Engineers (NSE) in partnership with MIDAS Software has presented 12 universities with licenses of MIDAS Engineering Software applicable in civil, structural, geotechnical, mechanical and special projects.

    The universities are: Abubakar Tafawa Balewa Unversities, Bauchi, University of Maiduguri, University of Illorin, University of Agriculture, Makurdi, and University of Nigeria, Nsukka.

    Others are: Federal University of Technology Owerri, Bayero University Kano, Ahmadu Bello Univesity, Zaria, Rivers State University of Science and Technology, Port Harcourt, University of Lagos, Obafemi Awolowo University, Ife, and University of Benin.

    The NSE President, Mr Mustafa Shehu, at the presentation ceremony, urged other universities that have not benefitted to work towards getting their own from MIDAS Engineering.

    He said, “NSE has selected 12 Nigerian universities across the six geo-political zones as centres for training, application and research of these Midas software applicable in civil, structural, geotechnical, mechanical and special projects.

    “Midas IT is donating 25 license of the software to each university, worth over $1.7million (N272m), for training and research programme. This is special and should be part of history both for the NSE and the Nigerian education sector in promoting engineering education and learning as well as enhancing professional competence and development of Nigerian engineers and students of engineering.”

    The Regional Manager, MIDAS Software, Ravi Kiran said they want to use this medium to expand their business in Nigeria.

    “It is basically a Korean software which we are introducing into the market, we intend to start with the universities because they need it the most right now,” he said.