United Capital Plc has been reclassified by the capital market authority, Nigerian Exchange Group, after the company’s stock hit a price bubble in the last five months.
The Tony Elumelu-owned financial and investment company has been trading above N5 per share on the Nigerian bourse from the last month of First Quarter to the first month of Q3 2021.
From the start of March 2021, United Capital share price rose from N6.10 kobo per share to N7 per share, as of July 30, appreciating by 15.1 percent within the period, according to Ripples Nigeria market analysis.
The price bubble led to the NGX reclassifying United Bank as a Medium-Priced stock group from Low-Priced stock group. Note that the Nigerian stock exchange has three Stock Price Groups or Categories for listed companies, with the highest being the High-Priced Group.
For a company to be reclassified into any of the group, it must trade for at least four out of the most recent six month period within a Stock Price Group’s specified price band.
Aside from the reclassification of the group, NGX also said it conducted, “the attendant change in the tick size change from N0.01 kobo to N0.05 kobo – in line with Rule 15.29: Pricing Methodology.”
Further analysis showed that amid the five months of the price bubble, United Capital shareholders gained N5.4 billion on their investment – the company’s stock currently trades at N7.17 kobo per share.
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