Massive banking stocks sell-off persists

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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 inves

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 tie-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.

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