Dear all,
This
is to bring to your notice the changes being effected on the Nigerian
Stock Exchange regarding Pricing Methodology and Par Value Rule.
This rule becomes effective from
today the 29th of January 2018 and we summarize the key changes to the rule below;
·
Notwithstanding its
par value, the price of every share listed on the Exchange shall be
determined by the market, save not that no share shall trade below a
price floor
of One Kobo per unit (NGN0.01).
·
Before today (the
effective date of the rule) the price floor for listed companies was
NGN0.05. with the implementation of the Par Value Rule, the price floor
will
be NGN0.01.
·
Listed Companies on the Nigerian Stock Exchange will be classified into three (3) groups (Group A, Group B, Group C).
·
Group A: shall
consist of equities that are priced at One Hundred Naira (N100.00) per
share or above, for at least four (4) of the last six (6) months, or new
security
listings that are priced at One Hundred Naira (N100.00) or above, at
the time of listing on The Exchange
·
Group B: shall
consist of equities that are priced at Five Naira (N5.00) per share or
above, but less than One Hundred Naira (N100.00) per share for at least
four (4)
of the last six (6) months, or new security listings that are priced at
Five Naira (N5.00) per share or above, but less than One Hundred Naira
(N100.00) per share at the time of listing on The Exchange.
·
Group C: shall
consist of equities that are priced at One Kobo (N0.01) per share or
above, but below Five Naira (N5.00) per share for at least four (4) of
the last
six (6) months, or new security listings that are priced at One Kobo
(N0.01) per share or above, but below Five Naira (N5.00) per share at
the time of listing on The Exchange.
Price Movement:
The minimum quantity that is required to be traded to change the published price of an equity security shall be as follows:
1.
Group A: Ten Thousand (10,000) units.
2.
Group B: Fifty Thousand (50,000) units.
3.
Group C: One Hundred Thousand (100,000) units.
Tick Size
The minimum price movement that equities shall trade are as follows:
1.
Group A: Ten (10) Kobo.
2.
Group B: Five (5) Kobo.
3.
Group C: One (1) Kobo.
Tabular Summary.
|
Group
|
Price Movements
(Minimum Quantity)
|
Tick Size (NGN)
|
Price Range Trading Period
|
|
A
|
10,000
|
0.10
|
N100.00 or above, for 4 of the last 6 months, or new security listings priced at N100.00 or above at the
time of listing
|
|
B
|
50,000
|
0.05
|
N5.00 or above but lower than N100, for 4 of the last 6 months, or new security listings priced at N5.00 or
above but lower than N100 at the time of listing
|
|
C
|
100,000
|
0.01
|
N0.01
or above but lower than N5, for 4 of the last 6 months, or new security
listings priced at N0.01 or above but lower than N5 at the time of
listing
|
Implication of The Rule:
We
believe that this new Pricing methodology and par value will bring about
liquidity in the equities market while the new rules will significantly
impact stocks currently trading
at NGN0.50 per share. The Insurance sector will be affected the most by
this new rule as a number of the companies listed in that sector
currently trade at NGN0.50 per share while other sectors on the NSE have
one or two stocks trading at NGN0.50.
At
implementation, we expect to see trading activities on stocks that trade
in the NGN0.50 range and therefor advise clients who have had the
intension of exiting their holdings
over a period without success to place their mandates as this may give them the opportunity to exit.
A Comprehensive interpretation of the rule is also attached to this mail as well as FAQ’s on the PAR VALUE RULE.
For further enquiries kindly send a mail to
research@capitalbancorpng.com
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