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THE
NIGERIAN STOCK EXCHANGE FACTBOOK 2008 Published
Under the Authority of the Council
of: THE NIGERIAN STOCK EXCHANGESTOCK EXCHANGE HOUSE Telephone: 234-01-2660287, 2660305, 2660335,
2669978, 2661293 Telex 23567 STEX.NG Fax: 234-01-2668281, 2668724 E-mail: nse@nigerianstockexchange.biz Website:www.nigerianstockexchange.com BRANCHES: Yola Uyo EDITORIAL BOARD Prof. Ndi Okereke-Onyiuke,
PhD, OON (Chairman) Mr. Kene Okafor
(Editor) Mr. Farooq Oreagba
(Editor) Mr. Arize Nwobu
(Deputy Editor) Copyright: The Nigerian Stock
Exchange ISBN 978 0262 - 1 - 6 Design/Typesetting by: Management Information Technology Department of
The Nigerian Stock Exchange, Produced by: Pathway Communications
Ltd., 5/6, Next to AfriBank Estate, Ilupeju - Tel: 01-7911733 |
FACTBOOK 2008 |
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A REVIEW OF PERFORMANCE OF THE NIGERIAN STOCK EXCHANGE IN 2007
By Professor Ndi Okereke-Onyiuke, PhD, OON Director General/Chief
Executive Officer |
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1.0 The
Operating Environment The economy performed below
projection, recording an average GDP growth rate of 6.3%, as against the
target of 10% set for the year but higher than the 5.6% recorded in 2006.
Growth was driven principally by the non-oil sector, as the continuing crisis
in the Niger-Delta area constrained crude oil exploration and production. By
year-end, crude oil production shut-in stood at 0.9mbd, while the non-oil
sector recorded an estimated 9-month average growth rate of 9.3%. The
downstream sector of the petroleum industry remained comatose and the country
relied on the imported refined petroleum products for domestic and industrial
operations. Official confirmation from NNPC showed that the country lost
N16.9billion to petroleum pipeline vandalization.
Meanwhile, earnings from non-oil export was above $1
billion, the highest in the country’s history. As at end-September 2007, manufacturing capacity utilization according
to Manufacturers Association of Nigeria (MAN) dropped from 44.06% in 2006 to 43.5%,
due to the difficult operating environment. Nevertheless, gross official
external reserves rose by 20% to stand at about US$50.75 billion by
end-December 2007, when compared with US$42.3billion in December 2006
attributed to high crude oil prices. Thus, CBN was able to adequately defend
the external value of the Naira, which appreciated by 8.03% to close at
N116.80/$. Inflation rate remained within the single digit target. By
December 2007, the headline inflation rate stood at 6.6%, down from 8.2% in
December 2006. Also, the All-maturities average Nigerian Inter-bank Offer
Rate (Nibor) closed at 12.6%, thus achieving a
positive real interest rate. The IMF completed the fourth and final review of the country’s
two-year Policy Support Instrument (PSI), with The consolidation programme in the insurance
sector was concluded during the year, with the Central Bank releasing about
N80 billion that was raised by the insurance firms during recapitalisation
programme to the successful companies. 2.0 The
Stock Market Global stock markets had
a turbulent time in 2007, owing especially to declining consumer spending and
weak corporate performance. In addition, In
n
High lending
rates in the money market n
Improved
macroeconomic performance n
Profit-taking
and n
Stock
switching by investors. 2.1 Secondary
Market Turnover Activity in the secondary market
was influenced by the improved awareness of the opportunities in the stock market,
improved operating results by some quoted companies, large available float
(especially in the banking and insurance sectors), sustained inflow of
pension funds, and low interest rates on deposits in the money market. Turnover on The Exchange closed
the year at N2.1 trillion or 9.1% of GDP, up by 343.7% on the N470.25 billion
(2.6% of GDP) recorded in 2006. Average daily activity rose from 570.6
million shares worth N8.62 billion in 2007 to 150.9 million shares valued at
N1.94 billion in 2007. The bulk of the transactions
were in equities, which accounted for N2.08 trillion or 99.86% of the
turnover value, up from the 99.6% recorded in 2006. Transactions in the
Industrial Loans sector accounted for N2.87 billion or 0.14%. The Federal Government
Development Stocks sector and Preference Stocks subsectors
were inactive on The Exchange in 2007. In 2006 turnover on Federal Government
bonds on The Exchange stood at N1.6 billion. Significantly, a turnover of
N4.13 trillion in 30,182 deals was recorded in the Over-the-Counter (OTC)
market for Federal Government bonds, as against N624.81 billion in 5,448
deals recorded in that market in 2006. However, in all, The
Exchange’s Turnover Ratio sustained its improvement, rising from 14.70%
in 2006 to 28.21% in 2007. 2.2 The Year’s 20 Most Active Stocks By Turnover
Volume 1. Wema Bank Plc - 13.072
billion shares 2. Fidelity
Bank Plc - 7.595 billion shares 3. First
City Monument Bank Plc - 6.478 billion shares 4. First
Inland Bank Plc - 5.867 billion shares 5. Intercontinental
Bank Plc - 5.281 billion shares 6. Lasaco Assurance Plc - 5.233 billion shares 7. Access
Bank Plc - 4.492 billion shares 8. Transnational
Corp. of Nigeria Plc - 4.092 billion shares 9. Mutual
Benefits Assurance Plc - 3.928 billion shares 10. Cornerstone Insurance Plc - 3.807 billion shares 11. International Energy
Insurance Plc- 3.660 billion shares 12. United Bank for Africa Plc - 3.634
billion shares 13. Union Bank of Nigeria Plc - 3.598 billion shares 14. Afribank
Nigeria Plc - 3.424 billion shares 15. Skye Bank Plc - 3.320 billion shares 16. Sterling Bank Plc - 3.241 billion shares 17. Guaranty Trust Bank Plc - 3.188 billion shares 18. NEM Insurance Co. Plc - 3.051 billion shares 19. Unity Bank Plc - 2.744 billion shares 20. Oceanic Bank International
Plc - 2.541 billion shares The
banking and insurance subsectors accounted for 19
of the Top 20 companies by turnover volume, as a fallout of the recapitalisation programme,
which boosted the available float in both subsectors
and created the condition for block trades in the listed companies. Another
major factor was the directive by the Central Bank that no state government
should hold more than 10% equity interest in any bank, which led to major
divestment by some parastatals. 2.3 Trading
In Rights Investors
traded rights in seven companies, as in 2006. In all, 177 deals valued at
N207.73 million were executed in this market segment in 2007, down by 58.8%
on the N504.7 million value of transactions in the
previous year. The companies whose rights were traded last year are: ·
First Bank of
Nigeria Plc ·
Livestock
Feeds Plc ·
University
Press Plc ·
Eterna Oil & Gas Plc ·
Cement Company
of Northern Nigeria Plc ·
Nigerian Aviation
Handling Co. Plc ·
Costain (WA) Plc 2.4 Foreign
Portfolio Investment The
Exchange lived up to its billing as an avenue for foreign investment in 2.5 Market
Capitalization The
total market value of 309 securities listed on The Exchange increased by
159.6% to stand at N13.295 trillion by year-end. Price appreciations by equities
consequent upon macroeconomic stability and improved corporate results
explain in large part the growth of the market capitalization during the
year. Additional factors included the listing of new securities (equities and
bonds). There
were many supplementary issues in the banking subsector,
while the insurance subsector listed some scheme
shares arising from the mergers and acquisitions elicited by the industry
consolidation. By year-end, the
market capitalization of the 212 listed equities accounted for N10.301
trillion or 77.5% of the aggregate market capitalization. At
the end of the year, the following 20 companies emerged with the highest
market capitalization, in descending order: S/No. Company Market
Capitalization (N’Bn) 1) First
Bank of Nigeria Plc 889.084
2) Intercontinental
Bank Plc 752.593 3) United
Bank for Africa Plc 558.869 4) Zenith
Bank Plc 533.810
5) Union
Bank of Nigeria Plc 498.624
6) Guaranty
Trust Bank Plc 479.625
7) Oceanic
Bank International Plc 435.411
8) Dangote Sugar Refinery Plc 389.500
9) Nigerian
Breweries Plc 370.565
10) Ecobank Transnational Incorporated 292.250 11) Diamond
Bank Plc 254.238
12) IBTC
Chartered Bank Plc 248.625 13) West
African Portland Cement Co. Plc 239.528 14) PlatinumHabib Bank Plc 205.197 15) Fidelity
Nigeria Plc 194.765 16) Guinness
Nigeria Plc 191.740 17) Afribank Nigeria Plc 186.907 18) Nestle
Nigeria Plc 182.786 19) First
City Monument Bank Plc 180.3 20) Ecobank Nigeria Plc 172.151 2.6 The
All-Share Index The Nigerian Stock
Exchange All-Share Index grew by 74.73% or 24,800.92 points to close at an
historic value of 57,990.22, compared to 33,189.30 in 2006. The performance
of the Index reflects positive improvement in prices of most quoted equities
during the year, especially the highly capitalised
stocks. 2.7 New Issues There
was improved activity in the Primary Market throughout the year, following
principally from the increased recourse to the stock market by companies and governments.
Also, some mergers and acquisitions were concluded through the facility of
The Exchange. In
2007, The Exchange considered and approved 65 applications for new issues and
mergers & acquisitions valued at N2.4 trillion or 10.5% of GDP, as against
69 applications for new issues valued at N1.65 trillion in 2006. The
banking sector accounted for 66.1% with 19 applications valued at N1.6
trillion while the non-bank corporate issues accounted for 12.25% of the new
issues approved in 2007, with 39 applications valued at N294.12 billion.
Government bond issue accounted for N520.01 billion or 21.7% of the total
amount approved during the year. Further analysis of new issues
approved in 2007 showed that the sum of N719.93 billion was raised through Initial
Public Offering (IPO) and supplementary issues; N168.13 billion through
rights issues; and N520.01 billion through bonds issue, including the Federal
Government bond. Listing by Introduction
accounted for N99.21 billion, in addition to eleven applications for
supplementary listings valued at N410.23 billion. Shares Placing and
Preference Share Issue accounted for N26.5 billion and N69.63 billion. Also
approved were five applications for mergers and acquisitions valued at N29.7
billion and two applications by Unit Trusts for the issuance of securities
valued at N7 billon. The
bulk of the approvals in the banking sector were to raise fresh funds through
public and rights offering valued at N697.9 billion and N152.8 billion,
respectively. Also, three banks obtained approval to execute Global
Depository Receipts (GDR) valued at N186.23 billion. Thirty-two
of the applications approved during 2007, with a market value of N1.2
trillion, have been concluded and admitted to the Daily Official List. 2.8 Major Primary Market
Transactions in 2007 Top Five
New Issues No. Issuer Amount
(N) Type of Issue 1 First Bank of Nigeria
Plc 250
billion Hybrid:
Public Offer and Rights 2 Oceanic Bank
International Plc 174.6
billion Public Offer 3 Zenith Bank Plc 129.6
billion Hybrid: Public and Rights
Offers 4 Guaranty Trust Bank
Plc 114.6
billion Global Depository
Receipts(GDR) 5 Afribank
Nigeria Plc 100.0
billion Public Offer 2.9 New
Listings in 2007 The
number of securities listed on The Exchange increased to 309, up from 288 in
2006. The new listings are: Equity 1. Dangote
Sugar Refinery Plc 2. Continental Reinsurance Plc 3. Custodian & Allied Insurance
Plc 4. STACO Insurance Plc 5. International Energy Insurance
Plc 6. Oasis Insurance Plc 7. Airline Services & Logistics
Plc 8. Ikeja Hotel Plc 9. Red
Star Express Plc 10. Big Treat
Plc 11. National
Sports Lottery Plc 12. Deap Capital Management & Trust Plc Bond 1. N10
billion 3rd FGN Bond 2013 Series 15 2. N10
billion 3rd FGN Bond 2013 Series 16 3. N4.107
billion FGN Bond Contractors Debt 2011 4. N40
billion 4th FGN Bond 2010 Series 1 5. N35
billion 4th FGN Bond 2012 Series 2 6. N35 billion 4th FGN Bond 2013 Series 3. 7. N2.46
billion Special FGN Bond for Local Contractors 2012 8. N9.23
billion Special FGN Bond for Local Contractors 2012 9. N65
billion 4th FGN Bond 2010 Series 4 10. N50
billion 4th FGN Bond 2012 Series 5 11. N45
billion 4th FGN Bond 2014 Series 6 12. N36
billion 4th FGN Bond 2010 Series 7 13. N20
billion 4th FGN Bond 2017 Series 8 14. N20
billion 4th FGN Bond 2017 Series 9 15. N20
billion 4th FGN Bond 2017 Series 9B 16. N20
billion 4th FGN Bond 2012 Series 10 17. N 37.19
billion 4th FGN Bond 2014 Series 11 Industrial Loans
& Preference Stocks 1. Standard
Alliance Insurance Plc’s N17.5 Million Floating Rate Cumulative
Irredeemable Preference Shares 2. Access
Bank Plc’s N13.5 billion Naira Denominated Redeemable Convertible Bond 3. Intercontinental
Bank Plc Irredeemable, Non-Cumulative Convertible Preference Shares Also, there were five
Memorandum Listings: ·
UBA Bond Fund ·
UBA Equity
Fund ·
UBA Money
Market Fund ·
UBA Balanced
Fund ·
Oceanic
Vintage Fund 2.10 Sector
Reclassification One new subsector – Airline Services was created on the
Daily official List. By this action, the number of subsectors
in the equity sector of the Daily Official List increased to 32. Also,
Afprint Nigeria Plc was reclassified on the Daily
Official List from Textiles subsector to
Agriculture/Agro-Allied subsector to take account
of changes that have occurred in the company. Managed Funds subsector was renamed “Other Financial
Institutions” to permit the listing of more companies providing
ancillary financial services within the group. 2.11 Delisting
in 2007 Eleven
securities were delisted during the period under
review: 1. CFAO
Nigeria Plc (Equity) 2. CFAO
(Nig) Plc Loan Stock 3. CFAO
Redeemable Debenture Stock 4. CFAO
Unsecured Debenture Stock (USDS) 5. BHN
Plc 6. FRN
21st DS 2007 7. FRN
24th DS 2006 8. FGN
25th Floating Rate Bond 2006 9. 2nd
FGN Bond 2007 Series 2 10. 2nd
FGN Bond 2007 Series 4 11. 2nd
FGN Bond 2007 Series 6 3.0 Market
Development As in previous years,
The Exchange implemented certain initiatives in 2007 to broaden participation
in our market, improve liquidity, and generally propel the market to greater
height. These initiatives are in the important areas of capacity building,
investor education, international cooperation, and new products development,
including: n
Demutualisation In
keeping with the trend in the global securities market, The Nigerian Stock
Exchange has commenced the process of Demutualisation,
with the setting up of a committee of Council to design a blueprint for its
implementation. The imperatives for Demutualisation
lay in the enhanced financing opportunities it opens to The Exchange and its
promise of improved efficiency in the management of The Exchange as a
business. n
Upgrade of market technology The
Trading Floor in n
Expanded
Branch Network We
commissioned the Uyo Branch of The Exchange on n
Extension
of Trading Hours The
Exchange increased trading hours from two hours to three hours response to
increased trading activity. This has impacted positively on trading volume
and enhanced the pricing efficiency of the market. n
Investor
Protection Fund During
the year, the SEC approved the guidelines for the administration of the
Investor Protection Fund (IPC). Subsequently, we have incorporated the fund
at the Corporate Affairs Commission (CAC) in order to enable its independent
operation. The Board of Trustees will be appointed in the New Year and
arrangement made to boost the fund through additional contribution by members
of The Exchange and other stakeholders. n
Pre-allotment
verification In a bid to reduce the delay
in the issuance of share certificates for new bank issues, there was a
tripartite agreement between the CBN, SEC and The NSE for the apex bank to
cancel the pre-allotment verification exercise. Hitherto, the apex bank had
subjected public issues by banks in the country to scrutiny so as to disallow
unscrupulous persons from laundering money through the process. The new
initiative should fast track the issuance of share certificate after
banks’ public offerings. Also, SEC and The NSE
announced ·
New Products In 2007, work continued
in the effort to deepen the Nigerian capital market by creating new products.
Some of the new products considered by The Exchange include: Mortgage-Backed
Securities, Asset-Backed Securities, Exchange-Traded Funds, and Derivatives
such as Futures and Options. Significant headway was
made on the arrangement for the introduction of Real Estate Investment Trusts
(REITs), with the incorporation of the rules for
this new market segment in the Listing Requirements of The Exchange. In the
same vein, The Exchange incorporated into its Listing Requirements rules for
the operation of a Third-Tier Securities Market for small and medium
indigenous companies. ·
Cross-border Listing The Exchange
facilitated a landmark transaction that led to the successful issuance of a
Global Depository Receipt (GDR) by Guaranty Trust Bank Plc on the London
Stock Exchange, thereby expanding the financing options for our listed
companies. ·
Introduction of the
Third-Tier Securities Market We introduced the Third
Tier Market during 2007 with the objective of assisting indigenous small and
medium enterprises access the stock market for financing. A Stakeholders
Forum was held at The Exchange on ·
Regional Integration The Exchange was an
active participant in the ongoing effort to integrate the markets of 4.0 Future
Outlook The
International Monetary Fund (IMF) projects a lower global GDP growth rate of 4.75%
in 2008, compared with 5.2% in 2007, owing to recent financial turmoil and
trade imbalances. Also, sub Saharan Africa is expected to grow from 6.1% in
2007 to 6.8% in 2008. However, IMF was more bullish on the growth prospect of
the Nigerian economy, projecting a growth rate of 8%, though lower than the
11% targeted by the Federal Government. There
is no gainsaying that the envisaged growth would only be achievable if the
current macroeconomic stability is sustained and supportive economic
infrastructure are provided at optimal levels and, more importantly, when the
problems in the Niger Delta area are resolved. We
hope that budget 2008 would be passed by the National Assembly in January
2008 as promised, so as to prevent any slow down in economic activities. Over
time, we have brought to the fore challenges militating against stock market
development in the country. These challenges include the incidence of
multiple tax regimes on businesses and investors. Therefore, we urge the
National Assembly to expedite action on all Bills on Tax and Capital Market
Reforms currently before it. The
pace of implementation of the privatization programme
during 2007 was rather slow. We hope that the Bureau of Public Enterprises
(BPE) would expedite action during 2008 so that those companies earmarked for
privatization through the stock market can be concluded without much delay. We
commend the Federal Government for sustaining the issuance of bonds through
the Debt Management Office (DMO). These bonds, because they are in most cases
long-dated have provided a reasonable depth to our market. We are gladdened
by the announcement by DMO of the intention of the Federal Government to sell
bonds worth N600 billion in 2008 to fund infrastructure projects. However,
for the purpose of transparency and pricing efficiency, the DMO should
migrate trading on the OTC to The Exchange, which has the technology to
deliver on transparency and efficiency. We are confident that
current growth trend in the market would be sustained in the New Year. The
Primary Market promises to be busy during 2008, as insurance companies move
to consolidate merger arrangements and expand capacity. Also, some companies
will recapitalise using the instruments available
in the market. The immediate challenge would be in the cost of transactions
in the market, which rose in 2007 as the Federal Inland Revenue Services
commenced charging Value-Added Tax on stockbrokers’ commission and
Stock Exchange/Central Securities Clearing System Limited transaction fees. We are glad that through
our supportive role, some comatose listed companies have been resuscitated.
In the course of 2008, we shall promote some companies from our Emerging
Market to the First-Tier, while admitting new companies to the Official List,
including listings in the newly introduced Third-tier Securities Market. Also, The Exchange will
continuously work to support government and its agencies towards the
realization of |
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