In contrast to other indexes on the local exchange, the Nigeria Exchange Limited’s banking index saw the biggest weekly gain of 6.08 percent during the previous week as investor wealth increased by N66 billion.
According to The Punch, investor demand for banking stocks was strong throughout the week, propelling the sector to a 5.01 percent gain on Wednesday. However, the news on Thursday that some Nigerian banks operating abroad had capital adequacy ratios below the regulatory benchmark caused sell-offs in the stocks.
The Central Bank of Nigeria disclosed in its financial soundness indicator report for the second economic quarter that certain foreign banks have a capital adequacy ratio that is below the regulatory threshold.
“As a result of the Bank’s adoption of a market-determined exchange rate policy, 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,” the apex bank stated.
As a result of moves made by investors in the banking and consumer goods sectors, the stock exchange saw the All-Share Index rise by 0.17 percent to close at 71,541.74 and the market capitalization close at N39.148 trillion, paving the way for the much-anticipated Santa Claus rally. The index’s year-to-date return was 39.59 per cent.
While all other indices finished higher, the NGX Sovereign Bond index closed flat. These included the NGX Main Board, NGX Insurance, NGX ASeM, NGX Oil & Gas, NGX Lotus II, and NGX Industrial Goods, which all saw depreciations of 0.54 percent, 1.44 percent, 1.03 percent, 0.58 percent, 0.22 percent, and 3.03 percent, respectively. The observed declines were caused by sell-offs in a number of stocks, including Oando, MRS Oil, Juli Plc, BUA Cement, Axa Mansard, and Mutual Benefit.
In contrast, gains of 6.08 percent and 0.21 percent, respectively, were reported by the Banking and Consumer Goods indexes. Ecobank Transnational International, AccessCorp, FBN Holdings, Jaiz Bank, PZ Cussons, Northern Nigeria Flour Mills, and International Breweries all saw significant price increases that contributed to this upward trend.
Investors traded 2.423 billion shares worth N45.07 billion in 34,704 deals on the Exchange floor last week. This is less than the 2.543 billion shares worth N38.644 billion that were traded in 36,138 deals the week before.
With 1.726 billion shares worth N22.76 billion traded in 18,190 deals, the Financial Services Industry led the activity chart and contributed 50.50% and 71.23%, respectively, to the total equity turnover value and volume.
The Consumer Goods industry came in third place with a turnover of 127.468 million shares worth N3.67 billion in 4,113 deals. The Conglomerates industry came in second with 201.478 million shares worth N2.35 billion in 1,533 deals.
Guaranty Trust Holdings Company Plc, United Bank for Africa Plc, and Universal Insurance Plc were the top three stocks traded over the course of the week. Volume-wise, they represented 543.315 million shares valued at N10.58 billion across 3,860 transactions, or 22.43 and 23.47 percent of the total equity turnover volume and value, respectively.
Top gainers for the week included Multiverse Mining and Exploration Plc, which closed at N9.39 per unit after gaining 57.02 percent; Thomas Wyatt, which closed at N3.32 after gaining 32.80 percent; Infinity Trust Mortgage Bank Plc, which closed at N1.77 after gaining 32.09 percent; ETI, which closed at N20.75 per unit after gaining 21.35 percent; Secure Electronic Technology Plc, which closed at N0.75 after gaining 17.19 percent; and Daar Communications Plc which gained 16.13 per cent to close at N0.36.
On the other hand, weekly decreases in the share prices of companies like Consolidated Hallmark Holdings (-12.70%), Oando (-12.29%), Abbey Mortgage Bank Plc (-10.47%), MRS Oil (-9.96%), Unity Bank (-9.09%), and BUA Cement (-7.21%) were observed.
Furthermore, as investors await the scheduled stress test of the capital adequacy ratio of Nigerian banks with foreign operations, caution may be exercised in the market, according to analysts at Cowry Asset Management Limited.
According to Cowry Research, this cautious attitude is highlighted by the prevailing global risks, including high inflation and forex volatility, prompting investors to tread cautiously as they await the anticipated Santa Claus rally.
