NSE Reviews Market Indices Composition

Stock

The Nigerian Stock Exchange (NSE) at the weekend announced the results of the biannual review for The NSE 30 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 Wednesday July 1, 2015.

New entrants into the composition of these indices are Sterling Bank under the NSE-30 Index with Total Nigeria exiting the index and Wema Bank is coming in under the NSE Banking Index, while Unity Bank is exiting it.

Under the NSE Insurance Index, Staco Insurance has given way to Prestige Assurance.

However, there was no change under NSE Industrial Index, NSE Consumer Goods Index, NSE Oil/ Gas Index and NSE Lotus Islamic Index.

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 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 10 most capitaliSsed and liquid companies in the Banking, Insurance and Food/Beverage& Tobacco (now Consumer Goods) sectors and the top five most capitalized and liquid companies in the Oil & Gas (Petroleum Marketing) sector.

The 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.

The Stocks are selected based on their market capitalisation 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 Exchange was not oblivious of the fact that the number of the stocks included in some of the indices may be inappropriate for optimal portfolio diversification; however, the numbers would be reviewed as sector conditions change.

On July 1, 2008, The NSE developed four sectoral indices and one index in 2013, 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.

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