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2017/2018 NSE FACT BOOK 2017/2018 NSE FACT BOOK
The Performance Documentary of Listed Nigerian Companies The Performance Documentary of Listed Nigerian Companies

The NSE 30 and Sectoral Indices 3 The criteria set is for a company to be eligible for (A5) Rebalancing/Re-Weigh ng Following are the four of the sectoral indices, as well as
inclusion, such company must have traded for at least The NSE 30 Index cons tuents are reviewed, re-weighted their methodology and rules.
70% of the number of mes the stock market opened and changed semi-annually on 1st July and 2nd January,
(A) The NSE 30 INDEX for trading whereby cons tuents are changed (added or deleted) (B1) NSE Banking-10 Index
In February 2009, The Nigerian Stock Exchange began 4. No sector can have a weigh ng of more than 40%. based on their market capitaliza on and liquidity in the The NSE Banking-10 Index methodology:
publishing a new index called The NSE 30 Index with index
5. No sector can have a weigh ng of less than 2%. previous rebalancing period.
values available from January 1, 2007. It has a base value of
6. No individual listed equity can have a weigh ng of more 1. The number of stocks is fixed at 10.
1,000 points.
than 20%. (A6) Market Capitaliza on Adjustments 2. The eligible equity universe is the top 10 most liquid
There are two ways in which a company's market companies in the Banking sector.
The primary objec ve in crea ng The NSE 30 Index was to (A3) Adjusted Market Capitaliza on Weighted capitaliza on can change. (a) Market forces driving the 3. The stocks to be included aside from having a high
provide an investable benchmark to capture the
Methodology for Calcula ng The NSE 30 Index price of the shares up or down. When this occurs, the index market capitaliza on must trade at least 70 per cent of
performance of the Nigerian stock market. Although well
The daily index value is calculated by dividing the Current is designed to reflect these market forces and no the number of mes the stock market is opened for
established, one issue that ins tu onal investors had with Market Value (closing price x number of listed shares x adjustments are required to the base market value (BMV). business during the preceding half year.
The NSE All-Share Index is the lack of liquidity in some of its capping factor) of all cons tuent companies by a Base (b) The other instance is the occurrence of corporate 4. No bank can have a weigh ng of more than 50%.
smaller stocks. This liquidity issue hampers the Market Value. ac ons where a company issues new shares or issues stock 5. The index is reviewed and rebalanced on a semi-annual
development of products such as exchange traded funds
rights, which impacts its market value. When corporate basis—on the first business day in January and in July.
(ETF's) and index futures, and it is with such in mind that To calculate the Base Market Value as at the base date, ac ons occur, they should not be reflected in the value of
the Nigerian Stock Exchange created The NSE 30 index to divide the Current Market Value of all cons tuent the index. Corporate ac ons require an offse ng Base (B2) NSE Consumer Goods Index - 15 Index
run alongside the All-Share index. The then Strategy and companies by the base market value and mul ply by 1000. Market Value (BMV) adjustment in order to prevent the The NSE Consumer Goods -15 Index methodology:
Business Development Directorate (now Capital Market
The NSE 30 Index is calculated using the formula below: value of an index changing due to such an event. By
Division), working in collabora on with the Market
adjus ng the Base Market Value, the index value remains 1. The number of stocks is fixed at 15. It started with 10
Opera ons & Informa on Technology of The Exchange, Current Market Value constant before and a er the event. companies but was increased to 15 companies on
were responsible for the design of The NSE 30 Index, while ————————————— X 1000 January 1, 2013
the la er would be responsible for the daily maintenance Base Market Value Base adjustments are not done for dividend 2. The eligible equity universe is the top 10 most
of the index. In 2010, The Exchange had agreement with
announcements due to the cumbersome and tedious capitalized and liquid companies in the Consumer
foremost Market Data Vendors for the dissemina on of the
Or CMV process of gathering accurate data and informa on. Goods sector. The stocks to be included aside from
NSE-30 Index and the Sectorial Indices. ————— X 1000 having a high market capitaliza on must trade at least
BMV In summary, the main reason for crea ng an index based on 70 per cent of the number of mes the stock market is
The NSE 30 Index includes the top 30 companies in terms of adjusted market capitaliza on is to deliver a fair picture of opened for business during the preceding half year.
market capitalisa on and liquidity. The NSE 30 is a price
the overall performance of the NSE equity market, and in so 3. No company can have a weigh ng of more than 50%.
index and is weighted by adjusted market capitaliza on.
Where changes other than price varia ons occur which doing, capture the heterogeneous nature of the wide range 4. The index is reviewed and rebalanced on a semi-annual
Adjusted market capitaliza on of a listed company is the affect the index, an adjustment is made in order to of equi es across various sectors. So as not to skew the basis, on the first business day in January and in July.
number of its listed shares, mul plied by the closing price eliminate the effects of such changes. performance of the index to predominant sectors such as
of that company, mul plied by a capping factor. Only fully the banking sector, and to provide a legi mate benchmark (B3) NSE Insurance-15 Index
paid common shares, denominated in the Nigerian
Such adjustment is designed to make the index (a er the to investment managers inves ng in the Nigerian capital The NSE Insurance-15 Index methodology:
currency are included in the index. Preferred shares,
changes) equal to the index before the changes. The market, we have capped the weigh ng of all sectors at 40%.
conver bles, bonds and mutual funds are all excluded. changes include new lis ngs, delis ngs and increase in the 1. The number of stocks is fixed at 15. It started with 10
Also for any stock to be eligible for considera on for issued capital of listed companies. The procedure for (B) The NSE Sectoral Indices companies but was increased to 15 companies on
inclusion in any of the NSE 30 and sectorial indices, such effec ng the adjustments follows the same pa ern as in On July 1, 2008, the NSE developed four sectoral indices January 1, 2013
stock must have been listed and traded for 12 calendar
The NSE All-share Index. with a base value of 1,000 points, designed to provide 2. The eligible equity universe is the top 15 most liquid
months.
investable benchmarks to capture the performance of companies in the Insurance sector. The stocks to be
(A4) Company Addi ons/Dele ons specific sectors. The sectoral indices comprise of the Top 10 included aside from having a high market capitaliza on
(A2) Calcula on and Methodology of The NSE 30 Index When a company is added to (or deleted from) the index, most capitalized and liquid companies in the Banking and must possess high liquidity with liquidity being
Generally, The NSE 30 Index is a modified market the adjusted market capitaliza on of that company is Industrial Goods sectors, the Top 15 most capitalized and measured by the number of days the stock is traded
capitaliza on index based on the following methodology:
added to (or deleted from) the index, making the total liquid companies in the Insurance sector and Consumer when market opened for business during the preceding
market capitaliza on rise or fall accordingly, which in turn Goods (Formerly Food, Beverages & Tobacco) sector, the half year.
1. The number of stocks is fixed at 30. affects the index level. Since indices should reflect only Top seven most capitalized and liquid companies in the Oil 3. No company can have a weigh ng of more than 50%.
2. The stocks are picked based on their Market market forces that change the value of the company, it is & Gas and all the listed companies in the Alterna ve 4. The index is reviewed and rebalanced on a semi-annual
capitaliza on and liquidity. Aside from having a high therefore necessary for the index Base Market Value to be Securi es Market (ASeM). The indices were developed basis, on the first business day in January and in July.
market capitaliza on, the stock must also be liquid.
adjusted to maintain a constant index value. based on the market capitaliza on methodology.
Liquidity being measured by the number of mes the
2017/2018 NSE FACTBOOK 2017/2018 NSE FACTBOOK
stock traded during the half year

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