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10 brokers responsible for 73% of transactions on NSE in February

By on March 9, 2015

As a clearer picture of transactions on the Nigerian Stock Exchange (NSE) for the month of February emerges, it has been established that 10 leading stock-broking firms were responsible for 72.51 per cent of total transactions on the exchange. The stock-broking firms traded shares worth N133.4 billion.

However, in volume terms, the 10 stockbrokers were responsible for 58.23 per cent of the shares traded within the period. According to the NSE Brokers Performance Report for the month of February posted on the bourse’s website, Stanbic IBTC Stockbrokers emerged as the top performer in terms of the value of shares handled within the period under review. The value of the shares it processed was put at N32.2 billion, representing 17.53 per cent of the total transactions on the NSE.
The report showed that CSL Stockbrokers Limited, Rencap Securities and EFCP Limited trailed Stanbic IBTC in terms of the values of shares traded, respectively.

While CSL Stockbrokers pulled transactions worth N22.9 billion, representing 12.49 per cent of the total transactions, Rencap and EFCP’s transactions  were put at N21.7 (11.82 per cent) and N19.11 billion, representing 10.39 per cent worth of transactions.

In terms of the total volume of shares traded, Rencap Securities (Nigeria) Limited ranked first with a 2.32 billion shares, which amounted to 15.02 per cent of the total number of shares traded on the exchange during the period.

It was followed  by CSL Stockbrokers which recorded 1.715 billion shares put at 11.09 per cent of the total number of shares traded. CSL was trailed on the table by EFCP with 890.183 million shares, translating into 5.75 per cent.
In a related development, Managing Director of Securities Africa Financial Limited, Folabi Afolayan, has disclosed that the main challenge facing stockbroking firms at the moment is that of volume of business.

He said trades in the market have been largely done by institutions (mainly foreign) while the domestic retail investors have not sufficiently returned to the market since the financial crisis of 2008/2009.

According to him, “There are a few stockbrokers working with these foreign institutions who collectively control the major volumes traded in the market.
Foreign investors are also very sensitive and any information that reflects uncertainty in politics and government policies trigger a fast withdrawal from the market, which results in high levels of volatility. Thus, the market still suffers from confidence issues within the domestic sector. We need increased level of domestic participation to improve the volume of trades and to contain the high volatility currently being experienced in the market.”

He listed other challenges to include the issue of brokerage commission, which continues to be squeezed as stockbrokers pursue limited clients for business as well as the increase in regulatory costs of doing business, which is like a double jeopardy.

“Of course operational costs or what I will call high infrastructure deficit costs is a common challenge across board for anyone running a business in Nigeria as you try to maintain a good and conducive working environment and service a level of redundancy,” he said.

BRIEFS

Real Sector Facility
As part of efforts to unlock the potential of the real sector to engender output growth, value added productivity and job creation, the Central Bank of Nigeria (CBN) has established a N300 billion Real Sector Support Facility (RSSF).

The facility shall be administered at an all-in-one interest rate charge of nine per cent per annum payable on a quarterly basis. Specifically, the central bank shall be entitled to earn three per cent as interest and the banks, a six per cent spread.

The  guidelines for the facility posted on the central bank’s website last week also stated that the fund would be used to support large enterprises for start-ups as well as expansion financing needs of N500 million up, to a maximum of N10 billion. The real sector activities targeted by the facility are manufacturing, agricultural value chain and selected service sub-sectors.

According to the CBN, the fund is to improve access to Nigerian SMEs to fast-track the development of the manufacturing, agricultural value chain and services sub-sectors of the Nigerian economy, increase output, generate employment, diversify the revenue base, increase foreign earnings and provide inputs for the industrial sector on a sustainable basis.

Revenue Shrinks
The sharp fall in oil prices in the last seven months has resulted in a 28.05 per cent drop in Nigeria’s revenue. The country’s gross receipts fell to a total of N3.676 trillion between July 2014 and January 2015, figures compiled by THISDAY have shown. This represents a reduction by N1.433 trillion, compared to N5.109 trillion gross federally collected revenue recorded by the Central Bank of Nigeria (CBN) in its economic report for the first half of 2014.

Brent crude price which peaked at $115 a barrel in June last year, declined to about $45 per barrel by January this year before rallying to $60 per barrel last month.  Crude oil accounts form about 90 per cent of Nigeria’s export earnings and 70 per cent of total revenue. As such, any drop in the price of oil has a significantly negative impact on the Nigerian economy resulting in revenue shortfall. The Federation Account Allocation Committee (FAAC) report between July 2014 and January 2015 compiled by THISDAY showed a decline in the country’s gross receipts, just as the net distribution among the three tiers of government also slumped.

Fuel Import
The Independent Petroleum Marketers Association of Nigeria last week directed its members to commence importation of refined petroleum products as the Federal Government had pledged to pay outstanding subsidy.

The National President of IPMAN, Chinedu Okoronkwo, disclosed the directive.   Okoronkwo said the directive followed assurances from the government and to alleviate the sufferings of Nigerians from the ongoing scarcity of petrol.  He  said “we have had series of meetings with government agencies that are saddled with the payment of subsidy claims and we have been assured of prompt payment.

“IPMAN members have been instructed to commence importation of petrol into the country to avert the lingering fuel scarcity. “The Ministers  of Petroleum and Finance have assured us of prompt payment of the marketer’s money; we urge Nigerians not to engage in panic buying of petrol as adequate petrol will be in circulation soon,’’ he said.

 

[ThisDay]