Most NSE stock prices not fair value – Shareholders.

The prices of most stocks quoted on the floor of
the Nigerian Stock Exchange have been described
as ‘not fair’ considering the positions of the firms
in question and the level of investment in them by
shareholders.

Some shareholders, who spoke to our
correspondent on the issue, pointed out that most
of the stocks were undervalued.

They, however, did not rule out the fact that a
few stocks were overvalued.

To this end, the President, Renaissance
Shareholders Association of Nigeria, Mr. Olufemi
Timothy, said. “Most NSE stock prices are not
fair value, and they cannot be passed as the true
prices considering all the market parameters.

“Many companies are undervalued while some are
overvalued.”

In advising shareholders on the steps to take to
maximise returns on their investments, Timothy
said investors should consider capitalising on the
undervalued shares. “Shareholders should look at
buying more of these undervalued shares. There
is a likelihood that their prices will go up,” he
added.

He urged the NSE to drive the market with the
required policies, stressing that the country could
not afford to have an Exchange that ccould not
guarantee stability in the market given the
strategic role the NSE plays in the economy.

The President, Constance Shareholders
Association of Nigeria, Mr. Shehu Mikail, admitted
that the current stock prices were not fair
enough, but stressed that the happenings in the
stock market were a reflection of the country’s
economic stance.

He said the country was currently plagued with
serious economic and financial challenges, which
had resulted in activities being slowed especially
in the financial sphere, which included the NSE.

Mikail added, “The prices can be better if things
turn around economically. The 2016 budget had
been passed and the implication of the passage
would start filtering into the economy in due
course. This and other factors put together, will
bring some relief to the economy.”

He, therefore, noted that most investors were
“waiting and looking” to see if there would be
meaningful change.

A shareholder, Mr. Erasmus Alaoma, who spoke
to our correspondent on the current state of his
investment on the NSE, said although he had yet
to have a reason to sell-off his holdings in some
companies he had shares in, it would be
unfortunate to sell at this time.

According to him, the values of most of his
shares have seriously eroded in recent times,
which had made him to relegate dealings in them
for the long run.

Alaoma called on the NSE to do everything
possible to restore confidence in the market,
saying it was not enough for the Exchange to
continue to blame the woes of the market on
current national economic situation.

Compare to other Exchanges in the world, the
shareholder said the negative news emanating
from the NSE was becoming very embarrassing
for shareholders.

The market capitalisation of
the NSE had fallen by
N811bn from the first trading
day of this year up till mid
March. Similarly, 10 out of
the 12 market indices were
also in the red as of that
date.

The NSE market
capitalisation dropped from
N9.75tn on January 4, 2016
to N8.939tn, while the All-
Share Index also closed at
25,988.40 basis points from
the 28,643.67 basis points
recorded on the first trading
day of the year.

For the third year running,
investors made huge losses in
the Nigerian equities market
last year as the market
capitalisation (equities only)
of the NSE shed a total of
N2.354tn between December
2014 and December 2015.

In the first seven trading
days of this year, equity
investors in the country’s
capital market lost N804tn of
their investments’ worth.
The market capitalisation,
which was N9.75tn on
January 4, depreciated to N8.95tn after seven
days of trading.

In mid-March this year, the NSE had 10 out of its
12 market indices in red when compared to the
performance of the market from the beginning of
the year. This represents about 83.33 per cent fall
year-to-date.

The NSE All-Share Index, Premium Index, Main
Board Index, 30 Index, Banking Index, Insurance
Index, Consumer Goods Index, Lotus II Index,
Industrial Goods Index and Pension Index closed
negative year-to-date as of the last trading day.

Only two of the indices, the Alternative Securities
Market Index and Oil & Gas Index, recorded gains
of 0.10 and 4.97 per cent year-to-date,
respectively. Both closed at 1,209.89 and 374.29
basis points on Friday.

The NSE All-Share Index closed at 25,988.40
basis points, falling by 9.27 per cent year-to-date;
Premium Index closed at 1,491.63 basis points,
shedding 5.89 per cent year-to-date; the Main
Board Index closed at 1,188.74 basis points, with
a loss of 11.15 per cent year-to-date; while the
NSE 30 Index ended mid-March at 1,147.60 basis
points, falling by 10.88 per cent.

The NSE Banking Index closed at 247.08 basis
points, shedding 7.97 per cent year-to-date; the
Insurance Index closed at 131.68 basis points,
having lost 7.66 per cent; the Consumer Goods
Index closed at 604.22 basis points, shedding
19.03 per cent; the Lotus Islamic Index ended at
1,799.77 basis points, depreciating by 9.96 per
cent; the Industrial Goods Index closed at
2,014.87 basis points, shedding 7.01 per cent;
and the Pension Index also shed 11.39 per cent
year-to-date to close at 722.34 basis points on
Friday.

A stock index is a measurement of the value of a
section of the market. It is computed from the
prices of selected stocks (typically a weighted
average). It is a tool used by investors and
financial managers to describe the market and to
compare the return on specific investments.

A market index is a quick measure to judge the
overall direction of the market and the scope of
its movements.

[Punch]