Nov 17 (Lagos) - From January 2018, it is likely that stocks will be allowed to fall below the 50 kobo levels because the SEC is going to approve the proposals in that regard.
This will mean difficult times ahead for shareholders of many Companies whose stocks currently trade at 50 kobo levels simply because they are not allowed to fall down more.
So who are the top contenders to lead the way all the way down to 1 kobo.
Among banks,
UNITYBNK ,
SKYEBANK and
WEMABANK are the top contenders since these stocks currently trade at 50 kobo. There were rumors about a merger between the two earlier this year but nothing materialized. The shareholders of these three banks will continue to have sleepless nights this Christmas.
Among Insurance Companies, there are a lot of contenders and it will be interesting to see which one of them reaches the lowest level in quickest time. This sector is so poor on the stock market that Companies have traded at 50 kobo levels for years. Let us take a look and we find that
CORNERST ,
GNI ,
GUINEAINS ,
INTENEGINS ,
MBENEFIT ,
NIGERINS ,
OASISINS ,
PRESTIGE ,
REGALINS ,
SOVRENINS ,
STACO ,
STDINSURE ,
UNITYKAP and
WAPIC all currently trade at 50 Kobo level.
Expect the Insurance sector to get obliterated once this rule is approved. These Companies have not paid dividends in years and their performance keeps getting worse. The management of these Companies will have a lot to answer if the Insurance regulator (NAICOM ) gets serious about corporate governance issues. Don't expect that to happen except a lot of talking and discussing with no action on ground.
In the media space,
AFROMEDIA is top contender to hit rock bottom price in our opinion based on past stock experience and performance.
Of course these are all in our opinion, maybe these Companies will do something extraordinary and gain in price who knows. But going by experience we would expect these stocks to fall below 50 kobo levels next year all things being equal.
If we had any of these shares in our portfolio, we would be looking to sell them now but there will be no buyers until we get far below the 50 kobo levels.
This rule is going to destroy a lot of shareholders wealth but in reality that wealth is not really there and only exists on paper and allows such Companies to borrow based on dubious valuations further destroying value. The rule should be implemented in our opinion.
reporting for easykobo.com on Friday, Nov 17 2017 from Lagos, Nigeria