NSE Premium Board outperforms index in H1, hits N7.6 trillion

The Nigerian Stock Exchange (NSE) Premium Board outperformed the All-share index in the first half of the year (H1), as its market capitalisation rose by N2.507 trillion to close at N7.567 trillion as at June 28, 2019.

The platform outperformed the NSE-All Share Index (ASI), which fell 4.66 per cent in H1.The NSE Premium Board market cap had in the first six months of the year, moved from N5.06 trillion as at January 2, 2019 to N7.567 trillion on June 28, 2019. Also, the NSE Premium Board Index during the period rose 9.17 per cent to emerge as the only gainer. It grew by 9.17 per cent to 2,396.22 points from 2,130.49 points at which it closed on December 28, 2018.

The board comprises Access Board, United Bank for Africa (UBA), Zenith Bank, FBN Holdings, Dangote Cement, Lafarge Africa (Wapco), Seplat Petroleum Development Company, and MTN Nigeria.

The Premium Board, which was launched on August 25, 2015, was meant to feature companies that meet the Exchange’s most stringent listing criteria of capitalisation, governance and liquidity. It aims at providing a platform for greater global visibility for eligible African corporate to make it easier for them to attract global capital flows, and reduce the cost of funding. 

Following the trend in 2018, the Nigerian equities market sustained bearish performance in H1 2019, as investors watched from the sidelines in anticipation of a positive trigger with a year-to-date decline of 4.66 per cent as at June 28, 2018. 

Capital market analysts attributed the performance of the board during the period to the listing of MTN Nigeria in May, 2019.
Recall that on May 16, MTN Nigeria listed 20.35 billion ordinary shares at N90 per share, valued at N1.83 trillion on the Premium Board of the NSE.

The Chief Executive Officer of NSE, Oscar Onyema, had said “Premium Board is one result of our commitment to place corporate governance front and centre as a way to improve the climate for doing business in Africa.   “We expect that companies on the Board will enjoy the highest levels of visibility and appeal to investors looking for large companies with the highest standards of corporate governance.”

Also speaking, the Executive Director, Business Development, NSE, Mr. Haruna Jalo-Waziri, said the launch of the Premium Board was in line with the NSE’s commitment to promoting and continuously developing a more transparent, liquid, accessible market.

“The Premium Board is for issuers with minimum market capitalisation of N200 billion and highest corporate governance standards. Companies aspiring to be listed on the premium board must achieve a minimum score of 70 per cent on the stringent Corporate Governance Rating System (CGRS). In addition, they are required to maintain a minimum free float of 20 per cent of their issued share capital or a free float value equal to or above N40 billion,” Jalo-Waziri said.

Afrinvest Limited in its review said despite the weak market sentiment experienced in the period, the Premium Board sector of the NSE received a major attention because of MTN Nigeria.It stated that MTN listing by Introduction on the NSE translated to a market capitalisation of N1.8 trillion, and implied price to earnings multiple of 9.5x. 

“Currently, MTNN is the second most capitalised stock listed on the NSE after Dangote Cement, accounting for 20.1 per cent of total market cap.”It added that the listing of MTNN at a time when market sentiment was weak had initially spurred the market with renewed impetus until there were concerns around liquidity, which impacted negatively on the earlier optimism on the stock. Nonetheless, the stock remains favoured by most portfolio investors.

Also, the Chief Operating Officer, InvestData Consulting Limited, Mr. Ambrose Omordion, said the Premium board in H1 closed positive due to MTN listing, saying that stocks listed on the Board have sound and good fundamentals and also foreign investors’ choice. 
Omordion said: “The ongoing volatility will continue as investors and fund managers rebalance their portfolios, with eyes fixed on political space and ongoing quarterly earnings position and post-election market dynamics. Investors should review their positions in line with their investment goals, the strength of the company numbers and act as events unfold in the global and domestic environment.

“However, we would like to reiterate our advice that investors should go for equities with intrinsic value, and allowing numbers to guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.”

Also, the Managing Director, Enterprise Stockbrokers Limited, Mr. Rotimi Fakayejo, explained that the MTN listing impacted on market cap and on Premium Board, and benefited other listed companies.