The recent downturn in the stock market is definitely taking its toll on investors with the All Share Index now down 29% in the last one year. The Index lost another 2.32% today closing with a market capitalisation of just N9.5 trillion.
While investors cry about the massive loss in values the exchange must be getting worried about the size of Dangote Cement in comparison to the entire market capitalisation of the NSE.
As at August 26, 2014, the market capitalisation of the All Share Index stood at about N13.6 trillion whilst Dangote Cement had a market cap of N3.4 trillion. That gave Dangote Cement a share of 25.4%. However, since the downturn began Dangote has gradually inched up in value in comparison to the wider index.
As at today Dangote Cement is valued at about N2.8 trillion compared to the All Share Index which closed at N9.5 trillion. That is now about 29% of the All Share Index. To understand how this has happened, Dangote Cement has lost 25.3% in the last one year compared to the NSE’s 29%.
The two market values are intertwined and it is obvious to anyone that whatever happens to Dangote Cement affects the market value of the index. To think only about 9% of Dangote Cement is currently on float suggest how much it impact it will have on liquidity and trading should it increase to the 20% minimum required.
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