Banks’ fear grips investors as equities drop further

A massive sell off in the banking sector weighed down the performance of the Nigerian stock market on Wednesday as investors reacted sharply to profit warning from FBN Holdings on declining earnings. Banking stocks made up half of the decliners on Wednesday with leading banking stocks such as Guaranty Trust Bank, Zenith Bank, FBN Holdings and Union Bank of Nigeria looming large on the top losers’ list.

The benchmark index at the Nigerian Stock Exchange (NSE) indicated a day-on-day decline of 0.86 per cent, equivalent to a loss of N68 billion. It was the third consecutive decline for the market.

Aggregate market value of all quoted equities dropped from N8.285 trillion to close at N8.217 trillion. The All Share Index (ASI) also slipped from 24,090.98 points to close at 23,883.34 points. With this, the negative overhang at the market worsened with average year-to-date return now at -16.62 per cent.
“The depreciation recorded in the share prices of Zenith Bank, FBN Holdings, Guinness Nigeria, UBA, and Guaranty Trust Bank were mainly responsible for the loss recorded in the index,” said analysts at FSDH Securities.

Analysts at Cowry Asset Management Limited, a Lagos-based securities and investment firm, stated that the profit warning by FBN Holdings triggered sell-offs in the financial services sector due to perceived significant exposure to the oil and gas sector.

Afrinvest Securities said the negative overall market position was broadly driven by price depreciation in Guaranty Trust Bank, Zenith Bank and Guinness Nigeria. The NSE Banking Index recorded the highest loss of 3.0 per cent. The NSE Insurance Index also dropped by 1.0 per cent. The NSE Consumer Goods Index slipped by 0.8 per cent while the NSE Industrial Goods Index closed flat. The NSE Oil and Gas Index however appreciated slightly by 0.02 per cent.

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“Against the negative corporate news flow in the market hitting investors’ confidence, we expect sentiment to remain dampened in subsequent trading sessions. This would however present an opportunity for strategic positioning in dividend paying counters by income investors. Overall, market will continue to trade sideways as more earnings results are awaited,” Afrinvest Securities stated.

Guinness Nigeria led the 23-stock losers’ list with a drop of N5.85 to close at N113. Seven-Up Bottling Company followed with a loss of N1.50 to close at N170. Unilever Nigeria declined by N1.19 to close at N26.81. Guaranty Trust Bank dropped by 64 kobo to close at N16.06. Zenith Bank fell by 57 kobo to N10.87. International Breweries dropped by 50 kobo to close at N19.50. Union Bank of Nigeria lost 25 kobo to close at N5.05. UACN Property Development Company dropped by 19 kobo to close at N5.01. FBN Holdings lost 16 kobo to close at N3.47 while Champion Breweries dropped by 13 kobo to close at N2.58 per share.

Total turnover stood at 269.50 million shares valued at N1.22 billion in 3,003 deals. FCMB was the most active stock with a turnover of 114.13 million shares worth N87.6 million.
On the upside, Mobil Oil Nigeria led 12 other gainers with a gain of 50 kobo to close at N149.50. Flour Mills of Nigeria followed with a gain of 30 kobo to close at N19.30. Ecobank Transnational Incorporated added 20 kobo to close at N15.20. Africa Prudential Registrars gathered 12 kobo to close at N2.53 while Nascon Allied Industries rose by 10 kobo to close at N7.10 per share.

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