The Nigerian Stock Exchange (NSE) has announced results of the biannual review for the NSE 30, NSE Lotus Islamic Index (NSE LII) and the five sectoral indices of the Exchange.
The sectoral indices include the NSE Banking, the NSEConsumer Goods, the NSEOil &Gas, the NSEIndustrial and the NSE Insurance. In a statement last week end, the NSE said the composition of these indices after the review will be effective onTuesday July 1, 2014.
The new companies joining the NSE market indices were Ashaka Cement Plc, UACN, Champion Breweries, Sterling Bank and Staco Insurance and Unity Capital while Skye Bank, NAHCO Plc, DN Tyre& Rubber Plc, Wema Bank, Consolidated Hallmark and Prestige Assurance were among the stocks reviewed out of the market indices.
The Index Committee of the NSE explained that the NSE-30 and NSE Industrial Indices are modified market capitalization index with the numbers of included stocks fixed at 30 and 10 respectively. Thenumbers of included stocks in the NSE-Consumer Goods, Banking, Insurance and oil/gas Indicesare 15, 10, 15 and 7 respectively.
The stocks are selected based on their market capitalization from the most liquid sectors. Theliquidity 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% 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 of1,000 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 10 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 Exchange 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 ofthe 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’ahadvisory 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.
The compiler of the indices maintains the right to modify the circulated selection above in connection with any mergers, takeovers, suspension or resumption of trading or any other company structure changes during the period before the effective date of the annual review.