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Exposure to institutional investors earns Rencap, CSL, Stanbic, others top NSE brokers

Rencap Securities (NIG) Ltd, CSL Stockbrokers Ltd, and Stanbic IBTC Stockbrokers Ltd topped the Nigerian Stock Exchange (NSE) list of best stockbrokers by the value of transactions for the week ended February 7, 2020.

The three brokers leveraged their exposure to institutional investors to outperform the other 123 registered brokers to post a combined trade value of N16.56 billion, which accounted for 40.67 percent of the entire N28.94 billion (71.03 percent) reported by the top 10 brokers.

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“For brokers in the top 10, we basically deal with institutional clients more, that’s the main driver,” Ayorinde Akinloye, equity research analyst at CSL Stockbrokers, said.

Analysis of the NSE data shows that Rencap Securities (NIG) Ltd raked the highest share of the transactions. With a trade value of N7.9 billion between February 3 and 7, the brokers at Rencap attracted a trade that accounted for 19.4 percent out of the total 71.03 percent value reported by the top 10 brokers, leaving the other brokers to struggle for the remaining 51.63 percent (N21.04 billion).

A brokerage company buys and sells orders submitted by investors. Its main duty is to act as a middleman that connects buyers and sellers to facilitate a transaction. Brokerage companies typically receive compensation by means of commission (either a flat fee or a percentage of the amount of the transaction) once the transaction has successfully completed.

Other stockbrokers that were top gainers on the NSE list of top 10 brokers by the value of transaction included Tellimer Capital Ltd, Cardinalstone Securities Ltd, and Meristem Stockbrokers Ltd as they recorded a trade value of N2.73 billion, N245 billion and N2.13 billion, respectively.

Commenting on the drivers of the brokers’ transactions, Henry Ogbuaku of Asset Management, Growth and Development Asset Mgt Ltd said it was the intrinsic company shares that they traded.

“For example, if a stockbroker traded 1million units of Dangote at N190 per share, the value will be higher compared to another that has done 20 million units of, say, Lasaco Insurance,” Ogbuaku said.

It depends on the shares that the brokers traded, he said.

Further analysis of the NSE data shows that Chapel Hill Denham Securities Ltd, EFG Hermes NIG Ltd, Nigerian International Securities Ltd, and FBN Quest Securities Ltd were the other brokers that completed the list of the NSE top 10.

Eight of the brokers on the top 10 list by the value of transactions also made it to the list of top 10 brokers by volume. Other brokers that made the volume list even though they did not appear on the list of top 10 by value included Readings Investments Limited and Morgan Capital Securities Limited.

“The brokers that topped by volume and are not in the top by value evidently are more retail-focused. Given the characteristics of domestic investors, they tend to buy lots of lower-priced stocks compared to highly-priced ones,” a broker at one of the top 10 by volume who asked not to be identified said.

According to the data by NSE, a total of 1.77 billion units of shares were traded by the top 10 brokers accounting for 59.96 percent of the entire shares traded between February 3 and 7, 2020.

The equities market closed on Wednesday on a positive note, up by 0.02 percent as investors traded shares from across the board. The NSE All-Share Index and market capitalisation increased on Wednesday. The NSE ASI appreciated by 6.53basis points, data by NSE analysed by BusinessDay show.



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