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Expect more delisting from NSE as economy worsens

Analyst of stocks and market deals have raised that if nothing drastic is done fast, time shall come when the trading floor of the Nigerian Stock Exchange (NSE) may be scanty or empty.

In an interview at the market yesterday, a stock broker who pleaded anonymity said the terms and conditions that is currently forcing out AshakaCem from the market are on the neck of so many other companies in the market.

The expert argued that “This is time for market regulators to think outside the box before it’s too late.

According to the stock broker, “There are strong indications that the decision of Ashaka Cement Plc to voluntarily delist from the Nigerian Stock Exchange (NSE) may lead to exit of some other companies which are in violation of the NSE’s free float rule”.

“The NSE rule stipulates that listed companies maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities. For instance, the free float requirement for companies on the Main Board is 20 per cent and 15 per cent for Alternative Securities Exchange Market (ASEM) companies.

“Some companies have free float deficiencies. Such companies have remained in the market due to waivers given to them by the NSE to comply. But Ashaka Cement disclosed last week it was delisting from the NSE and remained an unlisted public company. Shareholders of the company are expected to meet today to approve the proposal.

Other market watchers say the decision of Ashaka Cement might have emboldened some of the companies which have free float deficiencies to also exit the NSE.

By our findings, companies that currently have free float deficiencies may include Union Bank of Nigeria Plc, Capital Hotel Plc, Great Nigerian Insurance Plc, Chellerams Plc, Nigerian Ropes Plc, A.G Leventis Plc, Interlinked Technologies Plc, Transcorp Hotels Plc, Infinity Trust Mortgage Plc, Caverton Offshore Support Group Plc and African Paints Plc. While most of them are enjoying a period of grace to comply, Chellarams Plc has applied to migrate to the ASeM. On the other hand, Nigerian Ropes Plc has stated its intention to delist from the NSE.

Critical observers told our correspondent that the true position is that many companies are only struggling to remain afloat when they are deep down at the ocean floor instead of the trading hall.