New Par Value Implementation Will Enhance Liquidity At NSE – ASHON | Independent Newspapers Limited
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New Par Value Implementation Will Enhance Liquidity At NSE – ASHON

Posted: Jul 22, 2015 at 1:08 am   /   by   /   comments (0)

By Bamidele Ogunwusi,  With Agency Report


Though the Nigerian bourse closed northward on Tuesday, the first free fall of listed equities prices at the Nigerian Stock Exchange (NSE) in the last two weeks has greatly stalled the implementation of the new par value approved by the Securities and Exchange Commission (SEC).

The Association of Stockbroking Houses of Nigeria (ASHON) said the par value rule approved by SEC, would enhance liquidity at the nation’s bourse.

Investigations by the News Agency of Nigeria (NAN) revealed that the implementation of the new policy was temporarily suspended following the depressed character of returns on investments at the nation’s bourse.

A management source, who pleaded anonymity, told NAN on Tuesday that “the exchange was worried about the free fall of equities prices and decided to halt implementation of the policy at this critical period.”

According to him, the exchange was being mindful that implementation of the policy might contribute to further fall of equities.

NAN also reports that the All-Share Index, which stood at 34,061.89 as of June 2, lost 3,013.90 points or 8.85 per cent to close trading on July 16 at 31,047.99 points due to equities price depreciation, particularly blue chip equities.

The market capitalization, in the same vein, lost N998 billion to close trading at N10.576 trillion on July 16 as against N11.574 trillion recorded on June 2.

SEC had on June 2 approved the one kobo new par value rule submitted by the National Council of the Nigerian Stock Exchange (NSE).

The exchange, in a statement issued to stockbrokers, said “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 one kobo per unit.”

It added that the par value of the company shares traded on the NSE floors had been revised downwards to one kobo from the previous 50k.

Par value is the nominal value of a share as stated in the Memorandum of Association of an Issuer.