Nigerian stock market gained N372billion on Tuesday as investors rushed to buy the shares of MTN Nigeria Communications Plc (MTNN).
The shares of MTN Nigeria Communications Plc (MTNN) reached a new high of N131.7 per share on Tuesday May 21, 2019, having rallied by N11.95 or 9.98percent (permissible limit) as at 10:15 am.
The Nigerian bourse continued to thrive on the back of the MTNN listing, recording its highest session of gains since December 24, 2018 and highest turnover since March 2018. MTNN accounted for 85percent of turnover for Tuesday.
The All Share Index (ASI) rose by 288 points or 2.88percent and closed at 30,254.89points for the first time since April 23, 2019; against preceding day low of 29,373.40 points. Negative year-to-date (ytd) return has moderated to -3.86percent.
In 4,453 deals, dealers exchanged 335,599,980 units valued at N17.185billion. Dangote Cement Plc stock was also up, from N178 to N185, adding N7 or 3.93percent; while Forte Oil Plc advanced from N25.55 to N27.8, adding N2.25 or 8.81percent. On the losers table, Unilever Nigeria Plc led others after its shares dipped from N32 to N31, losing N1 or 3.13percent.
The value of listed stocks also increased from N12.937trillion to N13.309trillion, representing an increase of about N372billion in one day.
The rally speaks to the significance on this new listing and to the strength of the stock and company.
Taking a cue from the daily permissible limit of 10 percent which MTN Nigeria stock attains on daily basis since its listing, if demand continues to outweigh supply, it is surely off to reaching a high of N200 per share in the next 8 trading days to May 31. MTNN shares have gained N848billion in 4 days.
Analysts’ foresee investors taking profit on MTNN which has rallied 46percent in the four sessions since its listing by introduction.
However, they did not rule out the possibility of the stock persisting strong to drive the market to its fifth consecutive green on Wednesday.
The stock price upward trend continues amid the Nigerian Stock Exchange (NSE) confirming that significant issues have been raised that Dealing Members who have not been involved in the cross deals have been unable to trade on behalf of their clients.
“The Exchange is not unconcerned about this state of affairs. Indeed, Council members of The Exchange urged brokers to discuss with their clients about possible sales of shares”, said the NSE in t statement released very late at night on Monday May 20.
MTN Nigeria listed by introduction. Chapel Hill Denhan acted as a joint financial adviser with Stanbic IBTC Capital in the historic listing of MTN Nigeria.
MTN Nigeria Plc in a statement on May 20, 2019 said it met all conditions required to list as a member of the Premium Board of the Exchange.
“The listing by introduction means that the existing shares of MTN Group (78.8percent), the Nigerian investors (19.4percent); and other investors (1.8percent) are listed.
A Lagos based fund manager speaking anonymously to BusinessDay because of the sensitivity of the matter confirmed that people are now negotiating MTNN share prices on 2 days limit up. “N150 per share is the going rate for MTN Nigeria in off market deals,” our source said.
“As an Exchange that champions transparency and equity for all stakeholders in our market, we have received stakeholder feedback concerning our present rules on cross dealing and will consider the issues raised as part of our sustained efforts to ensure our market remains equitable for all stakeholders.
“We believe in market forces as the most efficient methodology for price discovery. Demand and supply will interact to discover appropriate prices as trading activities continue in the market”, NSE further said in the statement.
As the stock continues to be scarce at the Nigerian Bourse there is increasing anger among many stockbrokers and dealers who are unable to fill orders for their clients.
According to the NSE, “Since the listing of MTN Nigeria on Thursday, May 16, 2019, a total of 105,301,759 shares valued at N12,231,997,316 have traded in three (3) days. These trades were carried out by ten (10) Dealing Member Firms in 134 cross deals/negotiated deals.
According to the Rulebook of The Exchange, when a Dealing Member or Authorised Clerk has an order to buy and an order to sell the same security at the same price, the Dealing Member or Authorized Clerk may “cross” those orders at a price at or within The Exchange’s best bid or offer.
“A variant of this is the negotiated deal, which describes a situation where a cross deal is executed between two Dealing Member Firms at a price which may be within The Exchange’s best bid or offer or with the approval of The Exchange, outside the best bid or offer”, it noted.
Iheanyi Nwachukwu
