As investors today return to the trading floor of the Nigeria Exchange Limited (NGX), the management of the local bourse has released the results of its full year market index review.
Stock indices at the market include the NGX 30, NGX Lotus Islamic, NGX Pension, Corporate Governance Index, Afrinvest Bank Value Index, Afrinvest Dividend Yield Index, Meristem Growth Index, Meristem Value Index; and the five Sectoral Indices of The Exchange – NGX Banking, NGX Insurance, NGX Industrial, NGX Consumer Goods and NGX Oil & Gas.
Expectedly, the review has led to the entry and exit of some companies from several indices which will take effect when the market opened on Tuesday, January 4, 2022, the first trading day of the year.
Indices with exits and new entries
According to the result of the review seen by our correspondent, NASCON Allied Industries Limited, a member of the Dangote Group of companies exited NGX30 index while Oando joined the category of 30 elite securities in the market.
On the Afrinvest Bank Value Index, United Bank for Africa Plc replaced FCMB Plc which lost its position on the table.
On Afrinvest Div Yield Index, Guinness Nigeria, Vitafoam, Tripple Gee and Company Plc gained entry while AIICO Insurance Plc, Conoil Plc, Dangote Sugar Refinery Plc, Fidelity Bank Plc and United Capital Plc exited.
Similarly, Meristem Growth Index recorded significant changes with the exit of Nestle Plc and Stanbic IBTC Holdings and arrival of Dangote Cement Plc, Glaxo Smithkline Consumer Nig. Plc, Guinness Nig. Plc, Livestock Feeds Plc and Total Energies Marketing Nigeria Plc.
The last category fully impacted by the review is Meristem Value Index. On the index, Cadbury Nigeria Plc, Eterna Plc, Nascon Allied Industries Plc, Sterling Bank Plc and Lafarge Africa Plc became members.
On the flip side, Ardova Plc, Cap Plc, Custodian Investment Plc, FBN Holdings Plc, Honeywell Flour Mill Plc, United Capital Plc and Unilever Nigeria Plc lost their respective places on the index.
One-sided and Indices with no changes
Meanwhile, the rearrangement of the market partially affected two indices while some other categories did not record any changes at all.
For instance, NGX Industrial Index recorded Tripple Gee and Company Plc as the only incoming member with no one exiting; and NGX Lotus Islamic Index welcomed no new members but bid farewell to Ardova plc and Unilever Nigeria plc.
According to the results of NGX full year market index review, indices with absolute no changes are NGX Consumer Goods Index, NGX Banking Index, NGX Insurance Index, NGX Oil & Gas Index, NGX Pension Index, and Corporate Governance Index.
The indices were developed to allow investors to follow market movements and properly manage investment portfolios.
Designed using the market capitalization methodology, the indices are rebalanced on a semi-annual basis on the first business day in January and in July.
Genesis of the NGX market indices
The Nigerian bourse began publishing the NGX 30 Index in February 2009 with index values available from January 1, 2007.
On July 1, 2008, the NGX developed five 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; the 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 NGX Lotus Islamic Index (NGX LII) which consists of companies whose business practices are in conformity with Shari’ah Investment Principles, with the aim of increasing the breadth of the market and creating an important benchmark for investments as the alternative ethical and noninterest investment space widened.
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.