Investors Lose N252bn on Bearish Equity Trading

Stocks investors on the floor on Nigeria Exchange lost N252bn as the Nigerian Exchange sustained its bearish trading on Thursday.

The market lost about N467bn between Tuesday, when it resumed after the Easter holidays  and  Thursday.

The bearish trend on the local course followed the announcement of an increase in the capital base of banks in the country.

At the close of Thursday’s trade, the All-Share Index trended downward by 0.43 percent to 103,736.08, while the market capitalization depreciated by the same percentage to N58.65tn.

Accordingly, Transaction volume rose by 20.42 percent to 487.73 million units worth N15.63bn from the 8,908 deals.

Sector-wise, the performance was varied, with the banking and industrial goods indexes declining by 2.67 percent and 0.09 percent, respectively, while the insurance and consumer goods indexes advanced by 0.43 percent and 0.46 percent, respectively. The Oil/Gas sector remained flat.

The total number of gainers was 23, led by stocks of Morison Industries Plc, SCOA and International Energy Insurance 9.84 percent, 9.77 percent, and 9.72 percent gain each to N2.12, N2.36 and N1.58, respectively.

However, C&I Leasing, whose stocks depreciated by 9.79 per cent to N3.50 led 25 other losers. While Zenith Bank, Guaranty Trust Holding Company Plc and United Bank for Africa were the major drivers of the volume and value of traded equities.

Zenith Bank led in both volume and value, with 161.68 million units traded, amounting to N7.03bn across 527 deals.

Meanwhile, Meristem Research, in its banking sector update on the recapitalization, projected that of the three options that the Central Bank of Nigeria gave the banks to recapitalise in 24 months, most lenders would explore rights issues.

“In total, Nigerian banks are expected to raise NGN3.57trn in fresh capital within the specified timeframe.  As it stands, notable players, including FBN Holdings, Fidelity Bank, Wema Bank and Access Holdings have signalled their intentions to raise capital through rights issues and private placements. In response to the CBN’s policy, we anticipate a surge in capital market activities.

“Going forward, more banks are likely to join the fray, seeking to bolster their capital reserves through private placements, rights issues, and public offerings. We expect most banks to explore the right issues and other capital-raising activities. Furthermore, there is a growing anticipation of potential bank consolidations, particularly targeted at banks unable to meet the regulatory requirements.

“Given the relatively low valuation of Nigerian banks compared to their regional peers, we expect increased foreign investment and capital flow from international investors, which is positive for the external reserves and increased activities and participation in the Nigerian capital market,” the report partly read.

April 06, 2024