Sound corprorate governance will drive investment – Onyema

The Nigerian Stock Exchange ( NSE) has said that sound corporate governance(CG) practices in a nation will lead to higher performance in its economy, provide more sources for capital investment and increase credibility of shareholders.
Speaking in Lagos at the Certification ceremony of the corporate governance rating system, (CGRS) the chief executive Officer, NSE, Oscar Onyema said that the compliance to corporate governance attracts more international investors into that company.
Onyema explained that the level of a company compliance to the tenets of CG will determine the attractiveness of such company to international investors.
This according to him could increase or decrease the level of foreign direct investment FDI and foreign Portfolio investment (FPI) into a country through its well-run companies, as international investors are averse to organisations with low levels of CG practices and reputations risks.
He explained that a company that is regarded as having good corporate governance typically has access to a variety financing options. He added that it is a well established that companies with good CG generally received higher market valuations than those that are regarded as poorly governance.
Speaking further, he said on line with our commitment of making our listed companies attractive and creating values for investor, the NSE launched corporate Governance index which tracks the performance of all CGRS qualified companies on the NSE.
He said that CG index has become a global best practice as more countries and markets have embraced the culture of establishing corporate Governance indices.
He said in a 2013 comparative analysis for the World Bank and IFC PGS advisors three principal motives were identified as driver for stock exchanges launch of corporate governance. The three principal include the national corporate governance ” ceiling by supplementing the existing national corporate governance framework of law, regulation and code, to give companies the opportunity to differentiate themselves by showing good corporate governance practice and to gain access to fund committed to good CG practices and sustainability.
He said helping companies to distinguish themselves with the label of governance excellence was the key reason for creating a CG index. He however said that CG allows for the build up of positive reputation that benefits companies, the stock exchanges and market place as a whole.
Onyema said that index can expect to increase their access to capital particularly from foreign investors.
He pointed out that the NSE CG index which has a base date of December 2015 and base value of 1000 recorded a 26 months average return of 20.1 per cent, adding that the NSE CG index outperformed the NSE All Share Index, 30 index but was outperformed by the NSE Premium board index.
According to him” the NSE CG index is highly correlated with other NSE indices, stressing that by far the highest correlation coefficient was recorded with NSE 30 index of 99.6 per cent and closely followed by the NSE All share Index at 99.3 per cent.
He said that corporate governance would therefore be a veritable tool for investors in their investment decision making process and will provide opportunity for new products such as Exchange Traded Fund,
The CGRS certification, he said is also a prerequisite for companies to migrate or list on the Premium board of the Exchange.
He said that Premium board of the NSE features companies that adhere to international best practices in corporate governance and satisfy the exchange ‘S highest standard of capitalisation and liquidity.
NSE: Investors earnings reduces by N24bn
Trading activities on the floor of Nigerian Stock Exchange last week took a down ward trend, shedding N24 billion.
The NSE trading result for the week showed that market capitalisation of listed equities declined by 0.16 per cent to N15.277 trillion from N15.301 trillion recorded the previous week. The NSE All Share Index declined by 67.94 basis points to 42570.89 from 42638.83 reported the previous week
Similarly, all other indices finished lower during the week with the exception of the NSE Banking, NSE Insurance NSE CG Indices that rose by 1.52 per cent ,1.24 per cent and 0.27 per cent respectively, while NSE ASem closed flat. NSE Premium fell by 11.69 to 2977.15, The NSE Main Board down by 0 27 to 1859.71, NSE 30 Index 1.53 to 1935.15, NSE Consumer Goods Index depreciated by 0.42 to 973.58 , NSE Oil &Gas Index 6.42 to +48.67, NSE Lotus II dropped by 27.71 to 2665.39, NSE Industrial Goods Index sheds 11.32, NSE Pension Index dips by 14.61 to 14.61 points.
The volume of transactions for the week went down as investors traded turnover of 2.018 billion shares worth N21.740 billion in 25,496 deals in contrast to a total of 2.940 billion shares valued at N27.924 billion that exchanged hands last week in 28,567 deals.
The Financial Services Industry led the activity chart with 1.520 billion shares valued at N12.648 billion traded in 16,225 deals; thus contributing 75.30 per cent and 58.18 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 130.660 million shares worth N6.912 billion in 4,168 deals. The third place was occupied by Oil and Gas Industry with a turnover of 130.163million shares worth N251.941 million in 1,420 deals.
Trading in the top three equities namely – FBN Holdings Plc, Fidelity Bank Plc and Skye Bank Plc accounted for 567.824 million shares worth N3.456 billion in 4,891 deals, contributing 28.14 per and 15.90 per cent to the total equity turnover volume and value respectively.
Capital market operators said that depreciation in stocks continue this week as investors are likely to embark on profit takiing while repositioning ahead of companies releasing 2017 financial results, especially as the early ffilers expected to hit the market this week. .
They expected that relative low interest rates in the money market and sell-off in the bond market will boost inflow into stock market as fund managers play earnings season for quick returns target high dividend yield stocks,
A review of the investment for the week showed that 23 equities appreciated in price against 30 of the previous week. The result indicated 54 companies depreciated in price, compared 48 equities reported in the preceding week, while 95 equities remained unchanged higher than 94 equities recorded in the preceding week. An analysis of the transactions showed that Livestock Feeds Plc led gainers table for the week, gaining 19.00 per cent or N0.19 kobo to close at N1.19 kobo, Japaul Oil & Maritime Services Plc followed with a gain of 16.67 per cent or N0.06 kobo to close at N0.36 kobo while Cap Plc increased by 7.80 per cent or N2.75 kobo to close at N38.00. Other firms appreciated in price were AIICO Insurance Plc 7.14 per cent, United Bank for Africa 6.58 per cent, Godson Healthcare Plc 6.49 per cent, First Aluminium Nigeria Plc 5.41 per cent, University Press Plc 5.26 per cent, Cadbury Nigeria Plc 4.97 , Linkage Assurance Plc 4.55 per cent.
Conoil Plc topped losers char, declining by 18.32 per cent or N7.20 kobo to close at N32.10 kobo, Courteville Business Solutions Plc trailed with a loss of 15.79 per cent N0.06 kobo to close at N0.32 kobo while Unic Diversified Holdings Plc down by 15.63 per cent or N0.05 kobo to close at N0.27 kobo. Other firms that recorded price depreciation were Unity Bank 12.87 per cent, DN Tyre and Rubber Plc 12.00 , Wema Bank 12.76 per cent, FCMB group 11.28 per cent, Caverton Support GRP Plc 9.43 per cent. Vitafoam Nigeria Plc 8.54 per cent and A. G. Leventis Nigeria Plc 8.33 per cent.
Also traded during the week were a total of 111,794 units of Exchange Traded Products (ETPs) valued at N1.806 million executed in 10 deals, compared with a total of 25,586 units valued at N3.004 million that was transacted last week in 11 deals.
A total of 9,963 units of Federal Government Bonds valued at N10.057 million were traded this week in 21 deals, compared with a total of 2,785 units valued at N2.627 million transacted last week in 16 deals.