Retail investors in search of valuable information such as “Fact behind the figures” or excerpts of “investor calls” held between listed companies and analysts are not expected to find such information on the Nigerian Stock Exchange.
This is because there are no rules that mandate listed companies to publish such information on the stock exchange or even send notices of when such calls will be held. Instead, the companies send facts behind the figure’s information or notices on earnings calls to Pension Funds, Institutional Investors, and Fund Managers, giving them access to critical information required to make better investment decisions.
Retail investors who make the bulk of the investing community are often left out of these notices and neither are the presentations made available to them on the Exchange.
Findings by Nairametrics Analysts reveal several companies held their earnings calls since year-end results started flooding in March. However, none of this important information was published on the website of the Nigerian Stock Exchange or made available, and neither were notices published on the Investor Relations Page of the companies.
Nairametrics reached out to the Exchange to understand why information asymmetry is still a problem especially in a market where information is lacking. The Head, Listings Regulation, NGX Regulation (NGX RegCo), Godstime Iwenekhai, explained to Nairametrics that Rules of Nigerian Exchange does not require companies to publish earnings calls or investor presentations on their websites.
“The Rules of Nigerian Exchange (NGX) Limited do not require Listed Companies to publish dates of earnings calls and investor presentations. While it is not mandatory for Listed Companies to publish dates of earnings calls or investor presentations, we encourage frequent engagement with stakeholders. Where a Listed Company decides to hold such calls, they are required to comply with Nigerian Exchange Limited’s rules and ensure that they do not disclose price-sensitive information which has not earlier been published.”
The Investor Relations departments of listed companies are often charged with the responsibility of publishing critical information explaining their performance. This information should be published as a press release on the Investor Relations pages of the companies, the website of the Exchange, and via media outlets, for all investors to access. While some websites have a robust Investor Relations Page, most do not.
During earnings calls or investor presentations, the management of the companies often provides useful insights into their performance during the year. For example, the reason behind the rise or fall of revenues or profits; and also provide insights or outlook about the business performance. Whilst the information provided are not usually “price-sensitive” they provide analysts with enough detail to better value the stock.
Shutting our retail investors from this information gives undue advantage to Custom Street (stockbrokers and fund managers who trade on the Exchange) when it comes to investing and stock picking. For example, by reading excerpts of an investor presentation, analysts and fund managers can discern whether a company is doing badly offloading the stock to unbeknown retail investors who are not privy to the information.
Godstime, however, admitted there might be “gaps” as the Exchange considers who to plug the information asymmetry.
“However, we have noted there may be gaps that arise as a result of non-publication of the materials used during investors’ call, and we will carefully consider how best to address that situation, taking into account local nuances and best practice.”
For now, the only way to obtain this information is to visit the individual website of all the companies or visit sites such as stocks.nairametrics.com or Proshare to find them.