Business

NIGERIA: Stock Market Remains a Nightmare for Retail Investors

Reports that the Nigerian stock market has recovered from the 2008 crash may be false after all as findings have revealed that retail investors who got their fingers burnt from the crash are yet and may never return to the market, writes Eromosele Abiodun
 
They were promised mouth-watering returns at court-ordered meetings in preparation for public or initial public offerings. Return never came! They trusted regulators to protect them so they put out monies from their retirement benefits in private placements with the promise that the shares will be listed on the Nigerian Stock Exchange (NSE).
 
That never happened. Even the ones that were listed have either been taken over by regulators or struggling to survive. Imagine buying 10,000 units of a bank shares at N33.00 in a public offer in 2007 and today the same stock trades at N12. That is a loss of  about N210,000 if multiplied by the number of units. This investor is even lucky as the bank is an on-going concern.
 
But what about a situation where you buy a bank share in a public offer at N13 per share and you are told your 100,000 units (N1.3 million) has been watered down by share reconstruction that was done without your permission.Or that your shares have been reduced to 1,000 because they are now worthless due to the fact that  your bank was rescued by a Central Bank and merged  with another bank.
 
These are just a few of the many anomalies suffered by poor Nigerians in the capital market. It is an understatement to say that over 1,000 have died since then, while others have become incapacitation arising from high blood pressure.
 
You may have read in the media that the stock market  returned  47 per cent in 2013.Good statistics. Please ask those brandishing the numbers how many retail investors benefited from the return. Take out Dangote Cement Plc and Nestle Nigeria Plc and a few others in the fast moving consumer goods sector, the so called return will turn out a farce.
 
Recently, a ranking released by the NSE showed that its top 10 Stockbrokers were responsible for 66.20 per cent of the total value of shares sold between 10/02/2014 and 14/02/2014. The 3rd on the list sold securities worth N4.75 billion in the period under review.
 
Others on the list were: Stanbic IBTC Stockbrokers Limited, Rencap Securities Nigeria Limited, Cordros Capital Limited, CSL Stockbrokers Limited, Primera Africa Securities Limited, FBN Securities Limited, Sigma Securities Limited Partnership Securities Limited and Meristem Securities Limited.
 
How many retail shareholders today can afford to put out a lump sum to buy shares in million talk less of the numbers been put out by the Exchange. In a country where interest rate is prohibitive for even manufacturers tell me many retail investors can walk into a bank and ask for a loan to buy shares.
 
Minority Shareholders Burden
Recent data from the Exchange obtained by THISDAY revealed that, between January 2002 and June 2013, no fewer than 63 companies have delisted from the Nigerian Stock Exchange. A company is delisted from an exchange involuntarily, when the company for which the stock is issued is not complying with the listing requirements of the exchange.
A review of the list showed that out of the 63 companies, seven chose to delist voluntarily, while 47 were delisted due to regulatory instruction. Nine others delisted due to reforms/ expansion within the sectors they operated.
 
“Most of the companies that delisted voluntarily from the bourse had sited harsh economic climate and parent company buy-out as reasons. Whichever way, all of these companies at one time held annual general meetings, had public offerings where monies were received and never put to good use,” said a market watcher.
 
Aggrieved investors are sad that some sponsors of these companies are walking the streets as free men, with others coming back with different companies to raise money from hapless investors.
 
The following is a brief summary of some companies and the years/manner of their delisting from the Daily Official List of the Exchange:  Impresit Bakolori Plc (2002/voluntary); Dumez Nigeria Plc (2002/regulatory: NSE); CFOA Nigeria Plc (2007/voluntary); Acen Insurance Plc (2008/ regulatory: NAICOM); Atlas Nigeria Plc (2008/regulatory: NSE); Ceramics Manufacturing Company Plc (2008/regulatory: NSE) and Amicable Insurance Plc (2008/regulatory: NAICOM).
 
Exit in a Boom Time
It is quite interesting to note that some companies even delisted in the boom period leading to 2008. For example, Baico Insurance Plc had delisted in 2008 due to regulatory instruction from NAICOM, while Beverages (WA) Nigeria Plc was delisted from the daily official list in 2008 following the regulatory instruction by the NSE.
 
Equally,  in 2008, Enpee Plc due to regulatory instruction by the NSE, was delisted from the daily official list. This is ditto for Tate Industries Plc which delisted in 2008 on instruction by the NSE.
 
Others which delisted included: Maureen Laboratories Plc delisted in 2008 due to regulatory instruction by NSE; while the same regulator delisted Rietzcot Nigeria Plc in 2008 from its daily official list.
 
In addition, Intra Motors Nigeria Plc was delisted by the NSEin 2008; while Aviation Development Company Plc was delisted in 2008 for failing to meet regulatory requirements.
 
Grommac Industries Plc was also delisted in 2008 from the Exchange for failing to meet regulatory requirements. Others are: Onwuka Hi-Tek Plc (2008/ regulatory: NSE); Nigerian Lamps Plc (2008/regulatory: NSE); Nigerian Yeast & Alcahol Manufacturing Plc (2008/regulatory: NSE); Security Assurance Plc (2008/regulatory: NAICOM); Sun Insurance Plc (2008/regulatory: NAICOM); Nigerian Textile Mills Plc (2008/voluntary); and Footwear Manufacturing Plc (2009/regulatory: NSE).
 
Also among  the list of companies delisted from the Nigerian bourse are: Ferdinand Oil Mills Plc (2009/ regulatory: NSE); Christlieb Plc (2009/regulatory: NSE); BCN Plc (2009/regulatory: NSE); Liz-Olofin & Company plc (2009/regulatory: NSE); Oluwa Glass Company Plc (2009/ regulatory: NSE); Asaba Textile Mills Plc (2009/ regulatory: NSE); Aboseldehyde Laboratories Plc (2009/regulatory: NSE); Epic Dynamic Plc  (2009/regulatory: NSE); Famad plc (2009/regulatory: NSE); Aba Textile Mills Plc (2009/ regulatory: NSE); Afprint Plc (2010/regulatory: NSE); Incar Plc (2010/ voluntary); Nigercem Plc (2011/ regulatory: NSE); Daily Times Plc (2011/regulatory: NSE); and Albarka Airline Plc (2011/regulatory: NSE).
 
Oscar Onyema/CBN Reform
Other notable companies that delisted from the daily official list of the Exchange are: Abplast Plc (2012/ regulatory: NSE); Udeofosin Garment Plc (2012/regulatory: NSE); Hallmark Paper Product Plc (2012/regulatory: NSE); BACGO Bag Plc (April 11, 2013/  merged with Flour Mills Plc); Crusader Nigeria Plc (May 13, 2013/ merged with Custodian & Allied Insurance Plc; West African Aluminium Plc (June 3, 2013/regulatory: NSE);  and Nigerian Wire Industry Plc (June 3, 2013/regulatory: NSE).
 
Foremost Dairies Plc (2011/regulatory: NSE); Wiggins Teape Nigeria Plc (2011/regulatory: NSE); Okitipupa Oil Palm Plc (2011/regulatory: NSE); First Capital Investment & Trust Plc (2011/regulatory: NSE); Flexible Packaging Plc (2011/regulatory: NSE); Newpak Plc (2011/regulatory: NSE); Krabo Nigeria Plc (2011/regulatory: NSE); and Tropical Petroleum Plc (2011/regulatory: NSE).
 
Also, in 2011, Nigerian Bottling Company Plc delisted voluntary; while in the same year, Nampak Plc delisted voluntarily. United Nigeria Textile Plc (2011/voluntary); Bank PHB Plc (2011/nationalised: CBN); Afribank Plc (2011/nationalised: CBN);  Spring Bank Plc (2011/nationalised: CBN); Intercontinental Bank Plc (2011/merged with Access Bank Plc);  Oceanic Bank plc (2011/merged with ETI Plc);  Finbank plc (2011/ merged with FCMB Plc) and Ecobank lc (2011/absorbed by ETI: now Ecobank Nigeria Limited).

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