December 13, 2017

Alternative securities market records a decline

Stock exchange

Nigerian Stock Exchange

By Nkiruka Nnorom

The Alternative Securities Market, ASeM, of the Nigerian Stock Exchange, NSE, closed the 12 months period to December 12, 2017, in the negative region, recording -3.62 percent Return-on-Investment, RoI.

The poor performance, according to capital market operators, followed lingering investors’ apathy towards the sector triggered by lack of information flow and general lull in the economy.

Available data showed that activity in the sector fell to 1,146.68 points at the end of trading yesterday from 1,189.69 points at the beginning of the year, representing 3.62 percent negative return.

Further analysis of activity in the sector showed that it fell -0.87 percent Quarter-to Date, QtD, while month to date return stood at -1.04 percent.

Though the ASeM sector was put together by the NSE to provide small and mid-sized fast growth companies a platform to raise critical long term capital at relatively low cost to realize their business potentials, the sector has not fulfilled the objective.

It has not recorded new listings as expected at the time of its launch.

Also, apart from Mcnicols Plc and Chellarams Plc, which recently migrated to the sector due to free float deficiency, other companies listed in the segment of the market are hardly patronised by investors.

Reacting to the development, Mr. Chinenye Anyanwu, Managing Director/CEO, Dependent Securities Limited, said that apart from having small float, the number of companies listed in sector are few.

He explained that financial performance and information flow from the companies would increase their attractiveness to investors.

“They are not the drivers of the index. For some obvious reasons, the activities are low, but a few of them have been very consistent in paying dividend” he added.

Anyanwu however, stated that dearth of new listings in the sector is a general market feature, saying “you can count on your finger tips the number of listings we have had in all the market. So, lack of listing is not affecting them alone. The economy is not attractive for listing. It is only recently that we started seeing Rights Issues; new listings have been very rare.

“The economy is what is impacting them. We have had a lull in the economy for a long time. As the economy improves and companies begin to post special results and there is also liquidity in the economy, people will patronise them.”

In his own submission, Mallam Garba Kurfi, Managing Director/CEO, APT Securities, noted a number of the companies listed in the sector are dormant, saying that they are not active in terms of releasing their results.

“If a company has something to offer, people will buy the shares and when that is done, there will be activity in the stock. If you look at these companies in the alternative market, they don’t hold AGMs, they don’t publish their results. No first quarter, no second quarter, no last quarter,” he said.

On listing of new companies in the sector, he said there is need for the NSE to increase engagement with owners of small business to encourage more listing in the ASeM.

To date, only 10 companies are listed in the AseM Board.