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A Review of the Nigerian Stock Market Performance in the Year 2002 (Posted 18th February, 2003) Tell your friends about this page! Email it to them.

1.0 Preamble

Trading Room of The Nigeria Stock ExchangeAt the beginning of the year 2002, premised on the liberalization of the telecommunication sector and economic achievements in 2001, proposed privatization of the NITEL and other Government parastatals, expectation was high that year 2002 will witness more economic reforms. But these anticipated reforms were slowed down and moderate due to the failed privatization exercise of NITEL and other parastatals, inconsistencies over the year’s budget and the reported decline in the external reserves.

Generally, businesses contended with rising interest rate, declining consumer purchasing power and uncertainty in the polity. The downward review of the interest regime by the Banks in response to the persuasion of The Central Bank of Nigeria (CBN) toward the end of the year could not salvage the situation owing to the substantial fiscal deficit.

Never the less, The Nigerian Stock Exchange recorded an impressive performance and the liberalization of the telecommunication sector continued to have salutary economy effect, but a lot more would have been archived with a downward review of their tariff.

2.0 Market Turnover

In spite of the difficulties in the operating environment, turnover on The Nigerian Stock Exchange in 2002 stood at N59.8 billion, an increase by 3.8% from N57.6 billion accounted in 2001. The bulk of these transactions were in the equities sector of the market which accounted for 99.2% (N59.3 billion) of the turn over value.

All through the year, the Industrial Loans/Preference Stock Sector of the market remained inactive. Meager transactions were recorded in The Federal Government Development Stock Sector and the State Government Bonds Sector. A turnover of N2.3 million in 6 deals and a turnover of 1.5 million shares worth N775 million in 5 deals respectively were traded. At the end of trading, the following companies emerged as the 20 most active using turnover volumes as the yardstick.
 

Company Market Turnover (In Million - Naira)
1 Access Bank Nigeria PLC 894.3
2 First Bank of Nigeria PLC. 398.0
3 Union Bank Nigeria PLC. 341.7
4 Guaranty Trust Bank PLC. 284.6
5 Agip Nigeria PLC. 277.9
6 IMB International Bank PLC 237.1
7 United Bank for Africa PLC 196.8
8 Eko International Bank PLC 195.6
9 FSB International Bank PLC 175.6
10 Unilever Nigeria PLC. 150.7
11 Trade Bank PLC 148.5
12 Wema Bank PLC 147.2
13 UACN PLC 140.9
14 UACN Property Development PLC 130.2
15 Coop. Development Bank PLC 126.4
16 Manny Bank PLC 124.5
17 CMB PLC 124.4
18 BAICO Insurance PLC 113.6
19 Sun Insurance PLC 109.3
20 Inland Bank Nigeria PLC 104.5

3.0 All- Share Index

The Nigerian Stock Exchange All-Share Index appreciated from 10,963.11 points to close at 12,137.72 point. This represents 10.71% increase over the previous year’s figure. Strikingly, the All-Share Index on the 2nd of August had attained an all time high of 13,005.05 points before market forces made it to drop to its year-end position mainly because of adjustment for dividend payment and bonus issues. The performance of the index attests to the resilience of our quoted companies, which in spite of the difficult operating environment have continued to post heartwarming result.

4.0 New Issues

There was an increase in the number of Initial Public Offer (IPOs) in 2002, unlike 2001 when there was a dearth of IPOs. The Exchange witnessed eight IPOs under the review year. The banks, Federal Government and State Governments took advantage of different instruments of the market to further generate more funds for various purposes ranging from meeting their new minimum paid-up capital requirement for the banks and finances needed for the implementation of the Privatisation programme for the Governments.

Also, during the year 2002, The Exchange considered and approved 27 applications for new issues valued at N68.6 billion, as against 23 applications for new issues valued at N45.6 billion approved in 2001. This represents 50.4% increase compared to the previous year.

5.0 Trading In Rights

During the year under review, the volume of Rights traded decreased by 46% over the turnover recorded in 2001. A total of 75.5 million rights were exchanged in 60 deals valued at N19.7 million.

The following companies traded their Rights; Cement Company of Northern Nigeria Plc, Wema Bank Plc, NAL Bank Plc, Royal Exchange Assurance Plc. Others are Manny Bank Plc. Crusader Insurance Plc, UTC Nigeria Plc and Arbico Plc.

6.0 Market Capitalisation

At the close of trading on the floor of The NSE Market capitalization stood at N763.9 billion as against N662.6 billion the previous year (an Increase by N101.3 billion). This is an indication that the total market value of the 258 securities listed on The Exchange rose by 15.28%.

Factors that attributed to this rise are new listing, supplementary issues and price appreciation in the Equities Sector. Also, during the year, Cadbury Nigeria Plc converted its N2.5 billion Zero Coupon Convertible Loan Stock 2001/2008 into equities, Similarly, Unipetrol Nigeria Plc converted its N1.2 billion convertible Loan Stock into Equities.

Others are the admittance for listing of the N2.5 billion Zero Coupon First Yobe State Floating Rate Revenue Bond 2002/2005 and N2.5 billion First Ekiti State Government Floating Revenue Bond 2002/2005. Mutual Benefit Assurance Plc, Presco Plc and First Atlantic Bank Plc were admitted into the daily Official List of The Exchange. All this put together accounted for the growth in market capitalisation.

Four Federal Government Stocks and four State Government Bonds were de-listed due to maturity. Others that de-listed voluntarily are Dumez Nigeria Plc and Impresit Bakolori Plc. A unit Trust Scheme, Discovery Fund, which is managed by Asset and Resources Management Limited was admitted for memorandum Listing, thereby increasing the number of unit trust schemes with such listing to six (6).

                        20 Most Capitalised Companies on The Nigerian Stock Exchange.

Company Market Capitalisation {Naira}
1 Nigeria Breweries PLC. 114.1 billion
2 Union Bank Nigeria PLC. 53.6 billion
3 First Bank of Nigeria PLC. 53.4 billion
4 Unilever Nigeria PLC. 48.8 billion
5 Nestle Nigeria PLC. 36.7 billion
6 Guinness Nigeria PLC. 31.1 billion
7 Nigeria Bottling Company PLC 30.6 billion
8 Cadbury Nigeria PLC. 26.1 billion
9 M-Net/Supersport 24.8 billion
10 West African Portland Company PLC 21.5 billion
11 TotalfinaElf Nigeria PLC. 20.4 billion
12 Afribank Nigeria PLC 15.4 billion
13 United Bank for Africa PLC 13.1 billion
14 P.Z Industries PLC 13.0 billion
15 Guaranty Trust Bank PLC. 12.7 Billion
16 Mobil Oil Nigeria PLC. 12.3 billion
17 Ashaka Cement PLC. 12.2 billion
18 FSB International Bank PLC 12.2 billion
19 Flour Mills Nigeria PLC. 12.0 billion
20 Unipetrol Nigeria PLC. 10.9 billion

7.0 Market Development

Significantly, in 2002 The Exchange commenced works on the proposed upgrade of the Trading, Clearing and Settlement System which will be concluded in the year 2003 and restructured and re-engineered its business processes for enhanced efficiency. This when fully concluded and lunched will enable members to deal on of The Exchange from remote locations, taking advantage of Internet Technology.

Following the commissioning of the e-business platform in July 2002, it is now possible for investors on The Exchange market to access their Central Securities Clearing System (CSCS) database from The Exchange Website for the purpose of monitoring movements in their stock accounts. Further more, there is an opportunity for online, real time monitoring of stocks account. Another Branch was successfully opened in Yola, Adamawa State as part of the on-going effort to take the market closer to Nigerians, irrespective of geographical distance.

8.0 Future Outlook/Conclusion

Director General of the Nigerian Stock Exchange, Ndi Okereke-Onyiuke.It would be necessary for the government during the year to further stimulate economic growth through job creation initiatives, sustained implementation of the privatization programme and curtailment of the current high crime rate among other vices that could militate against the desired economic success. It is also pertinent at this juncture to advise the Federal Government to downplay their indecisiveness on the proposed privatization of NITEL and other parastatals as this is not good for business confidence, especially with regard to foreign and local investors who look to these issues for significant investment in Nigeria through the Stock Market.

According to The Director General of The Exchange Dr. Mrs. Ndi Okereke-Onyiuke, OON who in the year 2002 was elected as Chairman of The African Stock Exchange Association (ASEA) The Exchange re-affirms its commitment to the development of the Stock market. She said further that in year 2003, The Exchange shall advance on the automation of the market processes and introduce new products that will facilitate capital formation in the Economy. High on the agenda are the development of the derivatives market, achievement of full remote trading and automation of the Bonds segment of the market.

This is an election year which for our nascent democracy is viewed with a lot of concern. But The Exchange is confident about the future of our democracy and the prospects for a successful conduct of the general election. Given this background, we see further growth in the market indices.

Statistical Summary of Market Performance in 2002

Activities 2002 2001 % Change
Total Volume of Transaction 6.6 billion 6.0 billion +10
Average Daily Volume 26.4 million 24.0 million +10
Total Turnover N59.8 billion 57.6 billion +3.8
Average daily turnover N237.2 million N230.4 million +2.9
New Issue Approval N68.6 billion N45.6 billion +50.4
The NSE All-Share Index Closing figure 12,137.72 10,963.11 +10.71
Number of Listed Companies 195 194 +0.5
Number of Listed Securities 261 258 +1.2
Market Capitalisation N763.9 billion N662.6 billion +15.28

Material and data in this write-up was culled from a speech of The Director General of the Nigeria Stock Exchange, Dr. Mrs. Ndi Okereke-Onyiuke, Officer of the Order of the Niger, OON

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