Thursday, 14 February 2013

Nigerian Stock Exchange identifies companies with free float deficiencies

The Nigerian Stock Exchange (NSE) has identified five companies that have free float deficiencies. This comes on the heels of equity investors losing about N7billion yesterday due to sales pressure which dominated the stock market as investors resorted to profit taking.
The free float of a company is the proportion of shares that are held by investors who are likely to be willing trade. It is a measure of how many shares are reasonably liquid. It therefore excludes those shares held by strategic shareholders.

Currently at the Stock Exchange, the companies that have free float deficiencies are

Tourist Company of Nigeria Plc, NPF Microfinance Bank Plc, Dangote Cement Plc, Studio Press Plc, and Union Bank of Nigeria Plc.
The free float requirement for companies on the Main Board is 20 percent and 15 percent for Alternative Securities Market (ASeM) companies.

Companies listed on The Exchange must maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities.

According to the Nigerian Stock Exchange, Tourist Company of Nigeria Plc has only 1.31 percent free float and has been given February 28, 2013 as compliance due date; NPF Microfinance Bank Plc has 14.68 percent free float and has been given up to May 31, 2013 as compliance date; Dangote Cement Plc has 5.11 percent free float and has up to October 26, 2014 as compliance date; Studio Press Plc has 16.02 percent free float and was given February 1, 2012 as compliance due date; while Union Bank of Nigeria plc which has 14 percent free float has been given up to June 30, 2017 as compliance due date.

These companies applied for waivers from the Quotations Committee of management and they were specifically provided compliance plans with tentative timelines to support their requests.

“The Quotations Committee of Management considered and approved an extended timeframe for the companies to regain compliance with the listing requirement. The companies are however required to also provide quarterly disclosure reports to The Exchange detailing their level of implementation of the compliance plans,” the NSE said in its latest ‘X-Compliance report’ –a transparency initiative of The Exchange which is designed to maintain market integrity and protect the investors by providing compliance related information on all listed companies.

At the close of trading, the NSE All Share Index (ASI) dropped to 33,487.81 points from 33,511.60 points the preceding day while equities market capitalisation dropped from N10.721trillion to N10.714trillion. In 8,353 deals, equity traders exchanged 898.767 million shares valued at N4.689billion against 683.236million share worth N4.348billion exchanged the preceding day in 7,299 deals. The shares of Okomuoil plc rallied most at the bourse yesterday from N54 to N55.91, adding N1.91; while NewGold Exchange Traded Fund (ETF) lost most from N2, 538 to close at N2, 523, after shedding N15.

Culled from BusinessDay

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