Shareholders lose N311bn in banking stocks

Investors in the companies quoted on Nigeria’s stock market recorded a loss of about N311 billion between June and July 13, 2015, in the banking sector, following sell pressure that had persisted in the equity market. The volatile political and macro-economic environment that had characterised the current financial year had taken toll on the stock market, reducing shareholders’ investment value.

As at the time of filing this report, the market capitalisation of the Nigerian Stock Exchange (NSE), which gauges the value of listed stocks, stood at N10.801 trillion as against the opening figure of N11.658 trillion recorded at the close of trading on May 28, 2015, accounting for a loss N857 billion or 7.8 per cent. Checks by New Telegraph showed that the banking sub-sector recorded a drop of N311 billion during the period under review. Managing Director, Financial Derivative Company, Mr. Bismark Rewane, had said that absence of a firm policy direction makes investors jittery.

He added that the market remains bearish as investors seek shelter in alternative asset classes. Besides, he said that annual results released in June by quoted companies showed a mixed performance, stressing that the stock market may dip further following disappointing H1 earnings. Rewane said that stocks were set to find new bottoms when floor price removal (the one kobo) rule becomes effective, adding that market turnover will increase after the policy becomes effective in August. He noted also that foreign portfolio reversals were imminent as the Federal Reserve was set to increase interest rates.

The expert, who was optimistic that political stability in the country will attract foreign investment, which will add liquidity in the market, noted that the market may remain quiet in July as it awaits Q2 corporate announcements. Rewane had recently noted that the current downturn in the nation’s capital market might be sustained, adding that this became necessary following the challenging economic outlook, which has continued to fuel negative sentiment on the capital market triggered by the huge drop in oil prices.

The nation’s stocks fell to a more than three-month low and the naira hit another record low on the parallel market as at the time of going to press last Monday, as Central Bank of Nigeria’s (CBN) restrictions fed unofficial trade in dollars, traders said.

The local bourse, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, dropped for the ninth consecutive day as investors shed banking, consumer and oil shares. Low oil prices have battered the naira and government finances. Sub-saharan Africa’s second biggest stock index closed down 0.32 per cent on Monday, 11.5 per cent lower than its 2015 peak, hit on April 2, having soared 12.2 per cent in the two sessions after President Muhammadu Buhari won a closely-fought presidential election. The apex bank has said that it would not be focusing on the thinlytraded parallel market when determining the exchange rate, adding that people preferred to use the unofficial market for undocumented transactions.