NSE removes Union, Wema Bank, Ecobank from major indices

The Nigerian Stock Exchange (NSE) has started the final review of its group and sectoral indices. The newly reviewed indices will take effect on January 1, 2016.

Preliminary report of the review released yesterday indicated that the Exchange would remove Union Bank of Nigeria, Honeywell Flour Mills, UACN Property Development Company (UPDC), Wema Bank and Ecobank Transnational Incorporated (ETI) Plc from the list of 40 select stocks that serve as gauge for pension fund participation in the stock market.

The five companies would be replaced by Cadbury Nigeria Plc, GlaxoSmithKline Consumer Nigeria, Julius Berger Nigeria, Seplat Petroleum Development Company and Beta Glass Plc.

The NSE also reviewed other group and sectoral indices. Four indices- NSE Consumer Goods Index, NSE Banking Index, NSE Industrial Goods Index and NSE Oil and Gas Index, recorded no changes.

The NSE 30 Index, which tracks the 30 most capitalised stocks on the Exchange, will see the exit of FCMB Group, UAC of Nigeria and Cadbury Nigeria. The three companies will be replaced by Fidelity Bank, Total Nigeria and GlaxoSmithKline Consumer Nigeria.

In the insurance sector, the duo of Sovereign Insurance and Prestige Assurance will be replaced by law Union and Rock Insurance and STACO Assurance.

In the NSE Lotus Islamic Index, which tracks stocks that comply with the Islamic rules, the duo of Seplat and UAC of Nigeria will be replaced by Dangote Sugar Refinery and Seven-Up Bottling Company Plc.

Read also: NSE LIVE! Investors go for low-priced stocks

According to the Exchange, the composition of the new NSE Pension Index and other indices will be effective on January 1, 2016 after the completion of the year-end review and index rebalancing exercise which will see the entry of some major companies and the exit of others from the various indices.

The NSE Pension Index includes the top 40 companies in terms of market capitalisation and liquidity. The stocks that formed the index were picked based on their market capitalization from the most liquid sectors in line with the pension reform guideline. Also companies to be included in the index must have free float factor of at least five per cent, making the index the first index on the NSE that gave consideration to free float. Also, companies that formed the index must have paid dividend or bonus at least once in the last five years.

The pension index provides a tracking mechanism for pension fund administrators (PFAs), custodian to the PFAs (CPFA) and others that follow the National Pension Commission (PENCOM) guidelines. The index is also expected to serve as a benchmark for measuring performance and reporting performance to RSA Holders.

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