Business

April 22, 2024

Massive banking stocks sell-off persists

stocks

stocks

… As investors lose N1.57trn

By Nkiruka Nnorom

THE massive sell-off in the banking sector persisted last week ahead of the recapitlisation exercise announced by the Central Bank of Nigeria (CBN), thereby triggering a huge loss of N1.57 trillion to investors.

At the end of the week’s trading, the market capitalization dropped to N56.286 trillion from N57.865 trillion in the previous week, representing a 2.7 percent Week-on-Week (WoW) decline.

Similarly, the All Share Index (ASI) fell by 2.7 percent to 99,529.75 points from 102,314.56 points, driven by profit-taking activities in the shares of tier-1 banks.

The sustained pressure in the banking stocks – Guaranty Trust Company (GTCo), (-19.1%); Zenith Bank Plc, (-11.3%); United Bank for Africa (UBA) Plc, (-13.7%), FBN Holdings Plc (-10.3%) and Access Corporation (-11.9%) drove the banking index to 11.5 percent decline.

The trading activity level was positive, with an 41.1 percent increase in total trading volume and a 12.8 percent rise in total trading value. 

Breakdown of the transactions shows that volume traded rose to 1.597 billion from 734.04 million, while value of shares traded appreciated to N32.313 billion from N21.58 billion in the previous week. Sectoral analysis shows that four of the major sectors recorded price decline, while oil & gas sector closed flat.

The banking sector recorded the biggest loss, dropping by 11.5 percent, followed by the insurance (-2.8%), industrial goods (-2.7%) and consumer goods (-1.0%) indices. 

In their prognosis, analysts at Cordros Capital, said: “We anticipate a continuation of bearish sentiments, especially with the likelihood of profit-taking following the recent announcement regarding the suspension of the Dangote Foods merger and ongoing reactions to the recapitalisation exercise in the banking sector. 

“In the short-medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and corporate actions.”

Other details of the week’s transactions showed that the financial services sector measured by volume, led the activity chart with 1.148 billion shares valued at N22.422 billion traded in 26,192 deals; thus contributing 71.87 percent and 69.39 percent to the total equity turnover volume and value respectively.

 

The conglomerates sector followed with 117.629 million shares worth N1.579 billion in 2,501 deals, while while the oil and gas sector with a turnover of 92.498 million shares worth N810.985 million in 2,621 deals closed as the third most traded sectors.