NSE reveals results of biannual review of market indices

The Nigerian Stock Exchange (NSE) has announced the results of the biannual review for The NSE 30, NSE Lotus Islamic Index (NSE LII) and the five Sectoral Indices of the Exchange - The NSE Banking, The NSE Consumer Goods, The NSE Oil & Gas, The NSE Industrial and The NSE Insurance. The composition of these indices after the review will be effective on Tuesday July 1, 2014.

The following changes would be effected in the Exchange:

In NSE 30 Index,  Ashaka Cement Plc  replaces Skye Bank Plc; in NSE Lotus Islamic Index,  UACN Plc  replaces NAHCO Plc; in NSE Consumer Goods Index, Champion Breweries Plc  replaces  DN Tyre & Rubber Plc; in NSE Banking Index,  Sterling Bank Plc replaces Wema Bank Plc; in NSE Insurance Index,  Staco Insurance Plc and Unity Kapital Assurance Plc replace Consolidated Hallmark Ins. Plc and Prestige Assurance Plc

However, there is no change in NSE Oil & Gas Index and NSE Industrial Index.

As the Index Committee explained, The NSE-30 and NSE Industrial Indices are modified market capitalization index with the numbers of included stocks fixed at 30 and 10 respectively. The numbers of included stocks in the NSE-Consumer Goods, Banking, Insurance and Oil/Gas Indices are 15, 10, 15 and 7 respectively.

The Stocks are selected based on their market capitalization from the most liquid sectors. The liquidity is based on the number of times the stock is traded during the preceding two quarters. To be included, the stock must be traded for at least 70 percent of the number of times the market opened for business.

The Nigerian bourse began publishing the NSE 30 Index in February 2009 with index values available from January 1, 2007. On July 1, 2008, the NSE developed four sectoral indices with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors. The sectoral indices comprise the top fifteen most capitalized and liquid companies in the Insurance and Consumer Goods sectors, top ten most capitalized and liquid companies in the Banking and Industrial Goods sector and the top seven most capitalized and liquid companies in the Oil & Gas sector.

In July 2012, the Nigerian bourse launched The NSE LII which consists of companies whose business practices are in conformity with the principles of Shari’ah with the aim of increasing the breadth of the market and creating an important benchmark for investments as the alternative non-interest investment space widened. All the companies that appear on the Islamic Index have been thoroughly screened by Lotus Capital Halal Investment, in accordance with a methodology approved by an internationally recognized Shari’ah Advisory Board comprising of renowned Islamic scholars.

The price indices, which were developed using the market capitalization methodology, are rebalanced on a biannual basis -on the first business day in January and in July.