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Stock Exchange Modifies One kobo Base Price

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Nigerian stock market - Investors King
  • Stock Exchange Modifies One kobo Base Price

With several stocks on a free fall, the Nigerian Stock Exchange (NSE) has modified its one-kobo base pricing method, replacing it with a stopgap minimum price of 20 kobo for quoted equities.

The NSE last Monday began the implementation of its amendments to the method and par value rules, which removed the stopgap, mostly 50 kobo that had supported several stocks at their nominal value.The method allowed shares of quoted companies to trade as low as one kobo.

The new rules stipulated that “notwithstanding its par value, the price of every share listed on the Exchange shall be determined by the market, save that no share shall trade below a price floor of one Kobo per unit”.

The Nation had reported that more than two-thirds of quoted companies fall under the category of the most vulnerable stocks to the one-kobo base.

Within two months of the implementation of the method, most stocks that had hung on the 50 kobo nominal value, especially in the insurance sector, crashed by more than an average of 54 per cent.

Sources said the NSE became concerned when the free-falling stocks breached the 20 kobo mark with UNIC Diversified Holdings Plc hitting all-time low of 18 kobo. The Exchange then placed a temporary suspension on trading in the shares of UNIC Diversified Holdings, citing an observed trading anomaly.

After a review, the Exchange decided to reintroduce a stopgap of 20 kobo for quoted equities. The share price of UNIC Diversified Holdings was also adjusted upward to 20 kobo in line with the new band.

With the modification, stocks under Category C under the pricing method will have a minimum price floor of 20 kobo. With this, the prices of securities that are in this category will not fall below 20 kobo.

An investment banking source said while the one-kobo base rule had improved liquidity and restarted relatively active trading in many dormant stocks, it exposed the vulnerabilities of a large chunk of quoted equities. The source noted that there were concerns that many stocks could become targets of aggressive and hostile acquisitions, given their low valuations.

The declining share prices also worsened the prospects of new capital raising for many stocks, especially in the populous insurance sector, where about 70 per cent of the quoted stocks have since fallen below their nominal value since the implementation of the new rule. For instance, Consolidated Hallmark Insurance, which had recently offered rights issue at 50 kobo per share, has since fallen to 25 kobo, implying 50 per cent loss for shareholders.

The recent amendments to the pricing technology at the stock market had seen a categorisation of quoted companies under three groups with different pricing rules.

The tick size – the minimum price movement by which the price of a trading instrument can change-will also be lowered to as low as one kobo, although all quoted companies shall continue to trade within the current pricing band of 10 per cent maximum allowable change per day.

Under the new groupings and pricing rules, stocks under the first category-Group A, shall consist of large-cap equities that are priced at N100 per share or above for at least four of the last six trading months, or new security listings that are priced at N100 or above at the time of listing on the Exchange.

The second category – Group B, shall consist of medium-priced equities that are priced at N5 per share or above but less than N100 per share for at least four of the last six months, or new security listings that are priced at N5 per share or above but less than N100 per share at the time of listing on the Exchange.

The third category-Group C, where majority of listed companies fall, shall consist of equities that are priced at one kobo per share or above but below N5 per share for at least four of the last six months, or new security listings that are priced at one kobo per share or above but below N5 per share at the time of listing on the Exchange.

The new rules expectedly link price movements and minimum quantity of equities traded that will change the published price of an equity security.

Stocks under Group A shall have price change with minimum of 10,000 units.

stocks under Group B shall have price movement with a minimum of 50,000 units while stocks under Group C shall have price change with minimum volume of 100,000 units.

The tick size-the minimum price movement that any equity shall trade, shall also be linked to the groups. Group A will have a tick size of 10 kobo, Group B, five kobo while Group C will have a tick size of one kobo. This implies that the share price of each stock shall be allow to move up or down in multiples of its tick size.

A classification guideline for the implementation of the new pricing methodology had indicated that about 67 per cent or 116 of quoted companies were under the immediate pricing band of one kobo, 27 per cent under a band of 5.0 kobo while the remaining 6.0 per cent were under a band of 10 kobo.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Adesola Adeduntan’s Early Departure Prompts First Bank Holdings to Scrap Capital Raise Plans

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FirstBank Headquarter - Investors King

First Bank Holdings Plc has decided to scrap its plans for capital raise following the early departure of its Managing Director, Adesola Adeduntan.

The decision to cancel the extraordinary general meeting (EGM), which was planned to discuss the proposed N300 billion capital raise, comes amidst Adeduntan’s resignation from his role, eight months before the scheduled expiration of his tenure.

The bank formally announced the cancellation of the EGM in a filing seen by Investors King on Friday.

The meeting, which was initially scheduled to be held virtually on April 30, 2024, aimed to seek authorization from the company’s members for the capital raise and address other related matters.

Adeduntan’s resignation, announced on the same day as the cancellation of the EGM, comes as a result of the Central Bank of Nigeria’s tenure requirements affecting bank executives.

In his retirement letter addressed to the Chairman of First Bank, Adeduntan expressed gratitude for the support received during his stewardship and highlighted the strides made by the bank during his tenure.

He stated, “During this period, the bank and its subsidiaries have undergone significant changes and broken new grounds. We have repositioned the institution as an enviable financial giant in Africa.”

Adeduntan further mentioned his decision to pursue other interests, prompting his early retirement effective April 20, 2024.

The cancellation of the capital raise plans shows the impact of Adeduntan’s departure on the bank’s strategic initiatives.

It reflects a shift in priorities for First Bank Holdings as it navigates leadership changes and seeks to chart a new course for its future direction.

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Banking Sector

First Bank MD, Dr. Adesola Adeduntan, Resigns to Pursue New Opportunities

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Dr. Adesola Adeduntan - FirstBank CEO - Investors King

Dr. Adesola Adeduntan, the Managing Director of First Bank Nigeria Limited, has announced his resignation from the bank after nine years of leadership.

In a letter addressed to the Chairman of First Bank, Mr. Tunde Hassan-Odukale, Dr. Adeduntan expressed his decision to step down voluntarily, effective April 20, 2024, to pursue new opportunities.

Having served as the CEO since January 1, 2016, Dr. Adeduntan’s tenure has been marked by significant transformations within the institution. Under his leadership, First Bank and its subsidiaries have undergone substantial changes, positioning the bank as a formidable financial powerhouse in Africa.

In his resignation letter, Dr. Adeduntan highlighted the achievements made during his tenure, stating, “We have repositioned the institution as an enviable financial giant in Africa.”

He expressed gratitude to the board of directors of First Bank and FBN Holdings Plc for their support throughout his stewardship.

Dr. Adeduntan’s decision to resign comes as he approaches the end of his contract, which was set to expire on December 31, 2024.

He stated, “After which I would no longer be eligible for employment within the bank.” Despite his departure, he wished the institution continued success and progress in its evolution.

Throughout his career in banking and finance spanning over three decades, Dr. Adeduntan has been recognized for his contributions and received numerous awards.

He holds a Doctor of Science, Honoris Causa, and an MBA from Cranfield University, United Kingdom, and is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Bankers of Nigeria (CIBN).

Dr. Adeduntan’s departure marks the end of an era for First Bank, as the institution prepares to transition into a new phase of its evolution.

His leadership has left a lasting legacy of transformation and growth, and his contributions will be remembered in the annals of the bank’s history.

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Banking Sector

UBA America Strengthens Commercial Diplomacy, Hosts Diplomats, Others at World Bank Summit

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UBA

UBA America, the United States subsidiary of United Bank for Africa (UBA) Plc hosted diplomats, government officials and business leaders to a networking reception in partnership with the esteemed Business Council for International Understanding (BCIU) and the U.S. Department of States in Washington DC on Monday .

The event which was held on the sidelines of the ongoing IMF World Bank Spring Meetings was organised by the BCIU and US Department of State to enhance collaboration and fortify commercial diplomacy among nations, institutions and individuals.

Speaking during the event, UBA’s Group Managing Director/Chief Executive Officer, Oliver Alawuba, noted that the bank’s co-hosting of the event via its American subsidiary, underscores its commitment towards cultivating robust relationships within the development communities in the United States.

He said, “As a distinguished member of BCIU, a non-profit organisation providing customised commercial diplomacy services, UBA Group and UBA America share BCIU’s vision of actively pursuing strategic opportunities, contributing to global economic cooperation, deepening of economic diplomacy, facilitating ideas, forging partnerships, and adding value for all stakeholders.”.

“Our resolve to co-host this Networking Reception symbolises our dedication to fostering inclusive economic growth and partnership across borders. By leveraging platforms like this, we can collectively address shared challenges and seize opportunities for sustainable development,” he stated further.

BCIU is a non-profit Association comprising of policy experts, strategic advisors, and trade educators, and offers bespoke commercial diplomacy services to the world’s governments and leading organisations, from Fortune 100 companies to global investors and multilateral institutions.

Only last year, the CEO UBA America, Sola Yomi-Ajayi, was appointed to the Board of BCIU, where she collaborates with fellow board members to ensure the organisation operates in alignment with its by-laws and New York 501(c)3 non-profit legislation.

Yomi-Ajayi has been committed to nurturing long-term organisational growth and sustainability, thereby reinforcing the bond between UBA America, BCIU, and the broader international community.

UBA America is the United States subsidiary of United Bank for Africa (UBA) Plc, one of Africa’s leading financial institutions with presence in 20 African countries, as well as in the United Kingdom, France, and the United Arab Emirates. UBA America serves as a vital link between Africa and the global financial markets, offering a range of banking services tailored to meet the needs of individuals, businesses, and institutions.

As the only sub-Saharan African bank with an operational banking license in the U.S., UBA America is uniquely positioned to provide corporate banking services to North American institutions doing business with or in Africa.

UBA America delivers treasury, trade finance, and correspondent banking solutions to sovereign and central banks, financial institutions, SMEs, foundations, and multilateral and development organizations. Leveraging its knowledge, capacity, and unique position as part of an international banking group, the Bank seeks to provide exceptional value to our customers around the world.

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