Chinwendu Obienyi

Growth concerns, volatile crude oil prices, unrelenting naira asset sell-offs, pressured investors in banking stocks quoted on the main board and premium board of the Nigerian  Stock Exchange into losing  an estimated  26.2 per cent week -on-week.

This forced the local bourse  to post a bearish performance at the end of proceedings on Friday as the All-Share Index (ASI) fell 13.5 per cent. In the light of the above, investors lost about N1.56 trillion as market capitalisation declined to the N11 trillion mark while year-to-date (YTD) loss plunged to -15.3 per cent.

Across sectors of the market, the Banking index led the laggards, down by 26.15 per cent due to sell-offs in Zenith Bank (-36.7 per cent), Access Bank (-36.5 per cent) and Sterling Bank (-29.5 per cent). Similarly, the Consumer Goods and AFR-ICT indices declined 14.8 and 10.7 per cent respectively, following sell pressures in Cadbury (-38.9 per cent), Nigerian Breweries (-31.4 per cent) and MTNN (-19.0 per cent).

Price declines in Oando (-25.9 per cent), Conoil (-18.9 per cent), Wapic (-18.2 per cent) and NEM (-16.8 per cent) dragged the Oil & Gas and Insurance indices lower by 8.5 and 5.7 per cent respectively. Finally, the Industrial Goods index fell by 5.4 per cent on the back of price depreciation in Wapco (-22.0 per cent) and Cutix (-17.1 per cent).

Further analysis showed that the banking stocks recorded a loss of about N412 billion during the month of February 2020 following sustained sell-off as panic over coronavirus hits the equities market amidst signals of good year earnings results that trickled into the market. But for outbreak of coronavirus, market analysts had expected that the report of 2019 financials of the banks being released to the investment community, and expected corporate actions on dividend would ginger investors to sustain buy positions in the market.

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However, in a weekly report on the Nigerian Stock Exchange (NSE)’s website, 64 equities including banking stocks depreciated in price, higher than 25 equities in the previous week while only 2 appreciated in price during the week, lower than 36 equities in the previous week.

Zenith Bank fell by 36.7 per cent to close at N11.90 per share. Access Bank was next with 36.47 per cent to close at N5.40, Sterling Bank dropped 29.47 per cent to close at N1.10, while UBA, GT Bank, FCMB, ETI, UBN all dropped 0.75, 5.60, 0.29,1.25 and 1.05 per cent respectively.

Analysts who spoke with Daily Sun, noted that the decline was as a result of falling oil prices which would reduce foreign exchange reserves and ultimately complicate the Central Bank of Nigeria (CBN)’s efforts to defend the naira, meaning potentially heightened pressures on inflation and consumption with an eventual impact on growth.

Chief Executive Officer, Highcap Securities, David Adnori, said the decline was  a market -wide phenomenon and not just peculiar to banking stocks alone.

He noted that the development was as a result of a systemic crisis and the factors that precipitated the crisis was the impact of the coronavirus which has depressed the global economy.