Nigeria: Stock Exchange’s Premium Index Gets 49% Returns in Three Years

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After three years of establishment, the seven listed companies constituting the Nigerian Stock Exchange (NSE) Premium Board Index raised activities on the platform with a 48.53 per cent gain.

The index comprises of Access Baord, United Bank for Africa (UBA), Zenith Bank, FBN Holdings, Dangote Cement, Lafarge Africa (Wapco) and Seplat Petroleum Development Company.

Premium Board is the listing segment for the elite group of issuers that meet the exchange’s most stringent corporate governance and listing standards and features companies that adhere to international best practices on corporate governance and meet the Exchange’s highest standards of capitalisation and liquidity.

The NSE Premium Board index had a three-year return of 48.53 per cent, as it moved from 1,664.64 basis points as at August 25, 2015 to 2,472.51 as at September 7, 2018.

The platform, therefore, outperformed the NSE-All Share Index (ASI), which returned 13.92 per cent over the same period.

The NSE Premium Board Index has only declined by 3.57 per cent, outperforming the NSE-ASI, which recorded a loss of 11 per cent as at September 7, 2018.

The premium board gives a company access to a global pool of investors, who are focused on companies managed in conformity to the highest standards in their target markets.

Speaking on the performance of the board, the Chief Executive Officer of NSE, Oscar Onyema, stated that “companies on the board are well-run corporates with sound governance, which is part of the requisite qualification for listing on the platform.

“These stocks which currently have strong visibility on the Exchange will further appeal to investors, seeking to invest in companies with the highest standards of corporate governance.”

He noted that from inception to date, the Premium Board Index has continued to outperform the benchmark NSE ASI.

The Chief Executive Officer of InvestData Consulting Limited, Ambrose Omordion, noted that the index has been designed to provide a benchmark for investors looking to track the performance of large issuers, with excellent corporate governance and sustainable business models and this is what the foreign and institutional investors are looking for.

He added that the companies listed on Premuim Board index have track record of strong earnings and their share prices have helped the index to outperform the whole market performance.

According to Omordion, Dangote Cement, as a stock listed on the index, determines the direction of the market most times and whenever there is any price drop in Dangote Cement, the market will decline and if there is any rise in shares of Dangote Cement, the market closes positively.

The Managing Director of HighCap Securities Limited, David Adonri, noted that companies listed on the NSE Premium Board Index have good fundamentals that will attract investors.

He added that investors, especially the foreign ones, will invest in good companies, adding that a good company will always perform well in terms of sales or revenue and make profit.

He stated that it can be quite difficult to know a good company to invest in, especially in the short term, or when the general economic condition is good and favourable for businesses, saying that only few companies can survive crisis or continue to makes sales and profit in crises.

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