The Nigerian Stock Exchange (NSE) at the weekend picked Oando Plc and Beta Glass Company Plc as two of the 30 most capitalised stocks.
In its half-year review of sectoral indices, the NSE added Oando Plc and Beta Glass to the NSE 30 Index, the influential index that tracks the 30 most capitalised companies at the stock market. Oando and Beta Glass displaced Julius Berger Nigeria and Diamond Bank from the group. Oando also displaced MRS Oil and Gas in the NSE Oil and Gas Index, the sectoral index that serves as barometer for the oil and gas sector.
There were also major changes in the NSE Insurance Index, which saw the emergence of Consolidated Hallmark Insurance Plc, Sovereign Trust Insurance Plc and Veritas Kapital Assurance Plc as part of the influential stocks for the insurance sector. The trio of Cornerstone Insurance Plc, Staco Insurance Plc and Standard Alliance Insurance Plc were removed from the insurance index.
Also, Africa Prudential and Continental Reinsurance were added to the NSE Pension Index, which tracks stocks specially screened in line with pension investment. Julius Berger Plc and Beta Glass Plc were removed from the pension index.
The NSE Lotus Islamic Index, which tracks select stocks adjudged to meet the stringent Islamic standards of ethical stocks, saw the exit of heavily leveraged Lafarge Africa and addition of Nigerian Aviation Handling Company (Nahco).
Three other sectoral indices-the NSE Banking Index, which tracks banking subsector; the NSE Consumer Goods Index, which serves as benchmark index for the consumer goods stocks and the NSE Industrial Index, which underscores the building materials and other industrial goods stocks were unchanged.
The price indices, which were developed using the market capitalisation methodology, are reviewed and rebalanced on a bi-annual basis – on the first business day in January and in July. The composition of the indices after the review thus becomes effective today, July 2, 2018.
The NSE 30 Index and NSE Industrial Goods Index are modified market capitalisation index with the numbers of included stocks fixed at 30, 50 and 10 respectively. The numbers of included stocks in the NSE Consumer Goods Index, NSE Banking Index, NSE Insurance Index and NSE Oil and Gas Index are 15, 10, 15 and seven respectively.
The stocks are picked 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 half year. To be included, the stock must be traded for at least 70 per cent of the number of times the market opened for business.
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 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 15 most capitalised and liquid companies in the insurance and consumer goods sectors, top 10 most capitalised and liquid companies in the banking and industrial goods sector and the top seven most capitalised and liquid companies in the oil & gas sector.
n July 2012, the NSE launched the NSE Lotus Islamic index (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 recognised Shari’ah Advisory Board comprising of renowned Islamic scholars.