11 April 2018

Nigeria: Confusion As NSE, SEC Contradict Self On Technical Suspension On Oando Shares

Photo: Premium Times
Nigerian oil company, Oando.

The Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC) have disappointedly thrown the country's financial market into turmoil following the reversal of the lifting of the technical suspension placed on free trading of Oando PLC's shares.

A letter signed by the Executive Director of the NSE, Tinuade Awe stated that "further to a 9 April 2018 directive of the Commission, The Exchange lifted the technical suspension placed on Oando's shares after the close of trading today, 10 April 2018. Consequently, there will be no impediment to price movement in the shares of Oando when the market opens for trading tomorrow, 11 April 2018."

Following this directive, trading of Oando's shares commenced on Wednesday morning with an increase of 5.8 per cent from N5.99 to N6.30 in less than 3 hours of trading. To the disappointment of the public, the NSE stopped free trading of the Company's shares, reinstating the technical suspension.

Just two days ago, the capital market crashed following the declaration of a second term by President Muhammadu Buhari. In the wake, trading on the shares of Oando following a 175 days suspension came as great relief to the market. This has lifted a lot of eyebrows as the public are left to speculate the reason for reinstating the technical suspension. Was the temporary lifting of the suspension a ploy by the capital market regulators to manipulate the market?

Looking closely at the basis of the technical suspension, there is no mechanism for a technical suspension in the trading of listed shares under the NSE Listing Rules, the Exchange has evidently acted in a manner that is at variance with their rules and inconsistent with that of global exchanges.

Following the news of the lifting of the technical suspension, Financial Expert, Bismark Rewane, MD of Financail Derivative featured on the Channels TV morning show with Bosan, where mentioned how well the company has performed in the past six months regardless of the suspension. Oando's performance would have been reflective in its share price if allowed to trade freely as seen with the 5.8 per cent increase witnessed this morning. The technical suspension does not reflect the value of Oando's business operations, impact of increase in share price, new contract recently awarded by the NNPC for a 614km x 40 inch Gas pipeline which spans from Ajaokuta in Kogi to Kano. This further raises the question, who does the technical suspension benefit?

Furthermore, shareholders have been denied the ability to benefit from the positive sentiments of the capital market All-Share Index which gained 14 per cent in the period of the technical suspension.

Unfortunately, both the NSE and the SEC are yet to release an official statement on the reason for reinstating the suspension. The market regulators owe the general public a viable reason for reinstating the suspension. The reinstatement of the technical suspension 48 hours after a directive to commence free trading further depletes the country's image to the international market and to the foreign investors we so desperately seek. It shows the level of indecisiveness and poor attention to detail of the financial gatekeepers. The public is hopeful that the technical suspension will be permanently lifted and stay lifted to enable the over 270,000 shareholders of the company reap a return on their investment.

Thankfully for the stock market and shareholders of Oando PLC, by the end of the day on Wednesday 11th April, the NSE released an official statement promising the market that the technical suspension will be lifted by Thursday and Oando shares will trade freely, with no price restrictions on the Stock Exchange.

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