Proshare Creates “Dangote Index” and “Elumelu Index”; Monitors Large Cap Equity Value Movements

Monday, April 22, 2019  / 06:53PM / TheAnalyst / Proshare Markets

Nigeria’s stock market trading platforms have over the years evolved with standard market Indexes showing overall market and sectorial movements, however, to add a fresh perspective to market monitoring, Proshare has created two new Indexes, the “Dangote Index” and the “Elumelu Index” (“Gote” and “Tony”) to track major market action of stocks within a common core share ownership grouping.

These Indexes are designed to monitor trading actions by equity ownership groupings with large market capitalizations. 

Proshare, has observed that the four (4) listed companies owned by Africa’s arguably largest business mogul, Alhaji Aliko Dangote, are responsible for over 31% or a third of the N11.2trn market capitalization of the ASI and influence the ASI’s broad market direction when significant changes happen to any of the stocks in the Dangote portfolio.

The market Beta between the Dangote companies and the ASI runs close to a value of one, suggesting a high level of collinear relationship between the value of Dangote equities (with the heaviest weight attributed to cement) and changes in market value. Companies included in the list are: Dangote Cement, Dangote Sugar, Dangote Flour, and NASCON

Source: NSE, Proshare markets as at April 17, 2019

Index Rationale 

Since Dangote’s listed companies collectively influence about a third of the equities market by capitalization news and information concerning the group should be a good predictor of potential market direction by volume and perhaps value. For investors interested in Index-linked securities, a Dangote Index would give some indication of market direction and likely bullish and bearish turning points.

Of course it should be noted that events specific to Dangote’s corporate entities will likely have more direct effects on the companies themselves than the market as a whole. But whatever moves prices of the Dangote Group (particularly the cement company) will have knock-on market consequences for the ASI, the size of the pressure will, however, depend on the nature of the events.

In this light, to provide unique perspective to market movement, Proshare has decided to create a value-weighted Dangote Index to compare with movements of the daily ASI and provide investors with signaling information to guide market action. In addition to the Dangote Index an “Tony Index” which is also a value-weighted equity Index will be calculated and monitored daily along the same lines as the Dangote Index.

Source: NSE, Proshare markets as at April 17, 2019

These Indexes do not represent an attempt to provide either buy, sell or hold advice to equity investors but simply indicate large cap equity market guidance. The Indexes will be Value-weighted and adjusted for price changes daily. At times when the Indexes show emergent trends in contrast to overall mainboard movement, a technical brief would accompany the Index to explain market adjustments and provide perspective and context. The Indexes do not represent an official Index of any Exchange but are the product of Proshare research and markets groups.     

Existing Indexes on the Nigeria Stock Exchange (NSE)

1.       NSE 30 Index

2.      NSE 50 Index

3.      NSE Banking Index

4.      NSE Insurance Index

5.      NSE Oil and Gas Index

6.      NSE Consumer Goods Index

7.      Lotus Index

8.     ASEM Index

9.      Afrinvest Bank Value Index

10.  Afrinvest Dividend Yield Index

11.   Meristem Growth Index

12.  Meristem Value Index

Connecting The Dots 

To provide additional perspective to the Indexes that measure market movement (ASI, NSE30, NSE50, ASEM Index, Lotus Index, etc) the Proshare Indexes give investors a different perspective of the forces that drive market performance. Large cap equities associated with core key man interests reveal the impact of business decisions of economically important individuals on the performance of the NSE ASI.

Visit Dangote Cement Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit Dangote Flour Mills Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit Dangote Sugar Refinery Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit NASCON Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit UBA Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit Transcorp Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit Transcorp Hotels Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit Africa Prudential Registrars Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Visit United Capital Plc IR Page in Proshare MARKETS

Graph – One Year Share Price Movement

Click to enlarge 

Methodology of the Index 

The methodology of the Indexes follows the standard formula for value-weighted Indexes using values for January 2, 2019 as base values for all the equities listed on the Nigerian Stock Exchange (NSE) for which Aliko Dangote or Tony Elumelu have significant equity ownership and subsequently setting the base value the Index to 100.

Contact Us 

You may wish to contact any of the following analysts below for clarification or other enquiries concerning the Indexes:

Reshu           coo@proshareng.com

Grace            market@proshareng.com

Saheed         research@proshareng.com

Teslim          content@proshareng.com

To Receive a Copy of Index Reports 

To receive copies of the periodic reports on the “Gote” and “Tony” Indexes; subscribe to  Proshare Markets 

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