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Investors scurry for banking stocks as global selloffs worsen

Banking stocks were the most active and the largest representative group in the top gaining chart at the stock market as the global stock markets panicked over long-drawn effect of rising general prices on returns.

Negative sentiments were pervasive across the global stock markets with the stock market closing weekend with average decline of 0.91 per cent.

With some three losses in every four price, investors in Nigerian equities lost N241 billion in net capital depreciation. These moderated the average year-to-date return for Nigerian equities to 14.77 per cent.

The All Share Index (ASI) – the common, value-based benchmark index for the Nigerian equities market closed weekend at 49,026.62 points as against the week’s opening index of 49,475.42 points.

Aggregate market value of all quoted equities at the Nigerian Exchange (NGX) also mirrored the benchmark index dropping from its week’s opening value of N26.686 trillion to close weekend at N26.445 trillion.

The market mirrored the generally negative global stock market outlook. All major global stock markets closed on the downside as concerns mounted over the impact of increased fixed-income rates on the equities market. In United States of America, the S & P 500 Index fell by 4.6 per cent, the NASDAQ dropped by 5.1 per cent while the Dow Jones Industrial Average (DJIA) dipped by 2.4 per cent.

In United Kingdom, the FTSE 100 Index dropped by 1.1 per cent while the FTSE All Share Index slumped by 3.2 per cent. Germany’s XETRA DAX Index declined by 3.5 per cent. France’s CAC 40 Index lost 4.8 per cent. Japan’s Nikkei 225 Index dropped by 1.5 per cent. China’s Shanghai Composite Index depreciated by 1.2 per cent. Russia’s RTS Index worsened with 10.2 per cent drop while India BSE Sens Index declined by 1.3 per cent.

All Africa’s major markets also closed in the red. South Africa’s FTSE/JSE All Share Index dropped by 4.8 per cent. Kenya’s Nairobi Stock Exchange (NSE) 20 Index slipped by 0.1 per cent. Ghana Stock Exchange (GSE) Composite Index declined by 0.5 per cent while Egypt’s EGX 30 Index lost 1.4 per cent.

Broad indices also underlined the pervasive negative sentiments across the markets. The STOXX 600 Index- which tracks European markets, depreciated by 2.3 per cent. The MSCI EM Index- which tracks emerging markets, dropped by 2.3 per cent while the MSCI FM Index-which tracks the frontier markets, declined by 2.2 per cent.

Banking stocks appeared to be the safe havens in the Nigerian market as investors realigned portfolios amid increased socio-economic and political risks. The NGX Banking Index was the lone gainer during the week, with average gain of 2.27 per cent at the weekend. All other sectoral indices closed in the red.

The NGX 30 Index-which tracks the 30 largest stocks in Nigeria, dropped by 0.99 per cent. The NGX Oil and Gas Index recorded the highest loss of 4.68 per cent. The NGX Industrial Goods Index lost 3.92 per cent. The NGX Insurance Index lost 2.08 per cent. The NGX Consumer Goods Index slipped by 0.16 per cent.

Ethical investors booked major loss as the NGX Lotus Islamic Index-which tracks stocks that comply with Islamic rules, declined by 1.07 per cent. However, the NGX Pension Index – which tracks stocks that comply with pension funds’ investment rules rode on the back of gains in the banking sector to close with modest gain of 0.05 per cent.

Two major banks-Zenith Bank and Guaranty Trust Holding Company were among the top three most traded stocks during the week. Together with the Nigerian Exchange Group (NGX Group) Plc, the top three most active stocks accounted for 183.929 million shares worth N3.499 billion in 3,628 deals, contributing 32.68 per cent and 37.07 per cent to the total equity turnover volume and value.

The bank-led financial services industry remained the most active on the NGX with 381.958 million shares valued at N4.551 billion traded in 8,627 deals; thus contributing 67.86 per cent and 48.21 per cent to the total equity turnover volume and value. The information and communication (ICT) industry occupied a distant second with 59.345 million shares worth N2.480 billion in 1,272 deals whole the services industry ranked third with a turnover of 32.212 million shares worth N95.807 million in 607 deals.

The momentum of activities slowed down generally with total turnover of 562.856 million shares worth N9.438 billion in 16,013 deals last week as against a total of 719.398 million shares valued at N8.004 billion traded in 17,444 deals two weeks ago.

Also, a total of 4,938 units of exchange traded products (ETPs) valued at N2.135 million were traded in 18 deals compared with a total of 2,172 units valued at N352,773 traded in 18 deals penultimate week.

At the secondary debt market, a total of 2,961 bond units valued at N2.994 million were traded in eight deals compared with a total of 15,945 bond units valued at N16.238 million swapped in 15 deals two weeks ago.

Further pricing trend analysis showed that there were 42 losers against 17 gainers during the week as against 39 losers and 13 gainers recorded in the previous week. Three banking stocks made the top 10 gainers. Vitafoam Nigeria led the advancers, in percentage terms, with a gain of 12.25 per cent to close at N22.45.

Fidelity Bank followed with a gain of 10.85 per cent to close at N3.78 per cent. Unity Bank rose by 10 per cent to close at 44 kobo. E-Tranzact International rose by 9.97 per cent to close at N3.20. R T Briscoe appreciated by 9.37 per cent to close at 35 kobo. Trans-Nationwide Express chalked up 8.70 per cent to close at 75 kobo.

International Breweries rose by 6.25 per cent to close at N5.10. Access Holdings appreciated by 6.02 per cent to close at N8.80. Regency Assurance rose by four per cent to close at 26 kobo while AIICO Insurance inched up by 3.70 per cent to close at 56 kobo per share.

On the negative side, Academy Press led with a drop of 22.73 per cent to close at N1.70. The Nigerian Exchange Group declined by 13.92 per cent to close at N17. Cadbury Nigeria dropped by 13.82 per cent to close at N11.85. BUA Cement depreciated by 10.39 per cent to close at N47.85 while CWG, Associated Bus Company and Chams Holding Company lost 10 per cent each to close at 81 kobo, 27 kobo and 27 kobo respectively.

Market analysts remained cautious about the outlook for the market. Analysts at Cordros Securities said investors would be focused on the outcome of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), which opens today, to gain further clarity on the movement of yields in the fixed-income market.

“As a result, we envisage an extension of the cautious trading theme, especially from domestic investors. Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings,” Cordros Securities stated at the weekend.

Analysts at Afrinvest Securities expected “bargain hunting activities to boost market performance” as investors seek out low-priced value stocks.

Analysts at Arthur Stevens Asset Management said the next pricing cycle at the market would determine the general trend. Analysts noted that if the market slips below its current level to around 48,554.76 points; the bearishness may worsen and conversely, if it rises above 49,445.31 points; a bullish rally may ensue.

“Investors should pay close attention to global indicators as well as trends under the current global situation. We would like to reiterate that investors should go for stocks with good fundamentals,” Arthur Stevens Asset Management stated.

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