During the past week, the banking index of the Nigeria Exchange Limited recorded the highest gain of 6.08 per cent week-on-week compared to other indexes on the local bourse as investors’ wealth grew by N66bn.
Banking stocks enjoyed considerable patronage from investors during the week which pushed the industry to a 5.01 per cent gain on Wednesday. Sell-offs however hit the stocks triggered by reactions to the news that some Nigerian banks with international operations had capital adequacy ratios below the regulatory benchmark on Thursday.
In its second economic quarter report on the financial soundness indicator, the Central Bank of Nigeria revealed that some banks with international operations have a capital adequacy ratio below the regulatory threshold.
The apex bank said, “The development reflected a decline in the banks’ total qualifying capital relative to the increase in risk-weighted assets due to the depreciation of the naira exchange rate, as a result of the adoption of a market-determined exchange rate policy by the Bank.”
Generally, the stock exchange saw the All-Share Index rising by 0.17 per cent to close at 71,541.74 and the market capitalisation closing at N39.148tn based on moves by investors in the banking and consumer goods sectors, setting the stage for the anticipated Santa Claus rally. The year-to-date return for the index reached 39.59 per cent.
Similarly, all other indices finished higher except NGX Main Board, NGX Insurance, NGX ASeM, NGX Oil & Gas, NGX Lotus II and NGX Industrial Goods which depreciated by 0.54 per cent, 1.44 per cent, 1.03 per cent, 0.58 per cent, 0.22 per cent and 3.03 per cent respectively while the NGX Sovereign Bond index closed flat. Sell-offs across stocks such as Oando, MRS Oil, Juli Plc, BUA Cement, Axa Mansard and Mutual Benefit led to the recorded dips.
Conversely, the Banking and Consumer Goods indexes recorded gains of 6.08 per cent and 0.21 per cent, respectively. This upward trajectory was fueled by notable price increases in Ecobank Transnational International, AccessCorp, FBN Holdings, Jaiz Bank, PZ Cussons, Northern Nigeria Flour Mills and International Breweries.
A total turnover of 2.423 billion shares worth N45.07bn in 34,704 deals were traded in the past week by investors on the floor of the Exchange, lower than 2.543 billion units of shares valued at N38.644 billion that exchanged hands the previous week in 36,138 deals.
The Financial Services Industry led the activity chart with 1.726 billion shares valued at N22.76bn traded in 18,190 deals; thus contributing 71.23 per cent and 50.50 per cent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 201.478 million shares worth N2.35bn in 1,533 deals and the third place was the Consumer Goods industry, with a turnover of 127.468 million shares worth N3.67bn in 4,113 deals.
The top three equities traded during the week were Universal Insurance Plc, United Bank for Africa Plc and Guaranty Trust Holdings Company Plc. Measured by volume, they accounted for 543.315 million shares worth N10.58bn in 3,860 deals, contributing 22.43 per cent and 23.47 per cent to the total equity turnover volume and value respectively.
Top gainers for the week were Multiverse Mining and Exploration Plc which gained 57.02 per cent to close at N9.39 per unit, Thomas Wyatt gained 32.80 per cent to close at N3.32, Infinity Trust Mortgage Bank Plc gained 32.09 per cent to close at N1.77, ETI gained 21.35 per cent to close at N20.75 per unit, Secure Electronic Technology Plc gained 17.19 per cent to close at N0.75 and Daar Communications Plc which gained 16.13 per cent to close at N0.36.
Conversely, stocks such as Consolidated Hallmark Holdings, (-12.70 per cent) Oando (-12.29 per cent) Abbey Mortgage Bank Plc (-10.47 per cent), MRS Oil (-9.96 per cent), Unity Bank (-9.09 per cent ), and BUA Cement (-7.21 per cent) faced declines in their share prices on a week-on-week basis.
Analysts are expecting further profit-taking activities and potential market corrections following the recent surge.
“Investors are likely to continue rebalancing their portfolios in anticipation of the reporting and dividend earnings season. Additionally, caution may prevail in the market as stakeholders await the planned stress test of the capital adequacy ratio of Nigerian banks with international operations,” analysts at Cowry Asset Management Limited opined.
Cowry Research was of the view that this cautious sentiment is underscored by prevailing global risks, including high inflation and forex volatility, prompting investors to tread cautiously as they await the anticipated Santa Claus rally.