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Stock market loses N242bn in 2 days

By Peter Egwautu
After two days of the  suspension of  trading on the five banks’ shares whose managing directors were sacked by the Central Bank of Nigeria (CBN) last Friday, stock market has lost N241.519 billion, as market capitalisation declined from N5.556,091 trillion on Friday last week to close at N5,314,572 trillion, yesterday( Tuesday ).

The All-Share Index, another stock market gauge also declined significantly by 1,053.60 points basis from N24,237.85 points to close yesterday (Tuesday) at 23,184.25 points.

The market capitalisation and All share index are major stock market performance indicators which measure the value and trends of securities price movement in the stock market respectively.

The five banks’ shares that was suspended from trading on the stock market include: Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic International Bank Plc, Afribank Nigeria Plc and Fin Bank Plc.

The absence of these five banks’ shares from trading has affected investors’ return on investment, in the form of capital gains from the secondary market.
Meanwhile, Director General of the NSE, Professor Ndi Okereke Onyiuke has admitted that the suspension of trading of the five banks’ shares will affect the market capitalisation, adding that the suspension was placed on the banks’ shares to protect the interest of investors and the market generally.

She said, “ We could not allow the shares to be traded on the stock market because of the circumstances leading to the sack of the managing directors of those banks. Nevertheless, we shall place only two weeks suspension on the shares and then watch what will happen in the banks as the new managing directors take over. We shall also watch the reaction of the market.”

While announcing the suspension of trading of the banks’ shares, she said, “ The CBN, Securities and Exchange Commission ( SEC) and NSE have for the first time united to take a decision to place full suspension on the shares of  the five affected banks in other to protect the interest of investors and the economy generally.

According to her, “ The suspension of the shares of these banks will last for two weeks, thereafter the regulators will  meet to review it. The suspension starts Monday  to end Friday 28, August 2009. Before then, the regulators, i.e, CBN Governor, SEC Chairman, and Director Genera (DG), NSE DG, and its president would have met to review what would have happened with these banks coupled with the reaction of the market.

Even before then, I would have held discussion with president of Chartered Institute of Stockbrokers(CIS), and Association of owners of stockbroking houses to get their input. In the process of reviewing the banks, they may be place on technical suspension, full suspension or removal of the suspension.”

A review of the stock market shows that since Monday when the suspension of the five banks’ shares was announced, the market  lost N132.225 billion, from N5,.556,091 trillion on Friday to close at N5,423,866 trillion. In the second day of trading between Monday and Tuesday, the market lost N109,294 billion from N5,423,866 trillion to close yesterday (Tuesday) at N5,314,572 trillion.


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