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Banking stocks boost trading amid value dip
TRANSACTIONS on the daily activity chart of the Nigerian Stock Exchange (NSE) showed that investors, despite the paucity of funds and the high taking of profit in the market still invest heavily in the financial subsector of the market.
The banks which form the major fulcrum of the financial subsector enjoy more patronage than their counterpart in the Insurance subsector of the capital market, wherein investors are not too sure where the pendulum is swinging in terms prices of stocks.
As at Friday cumulative value of daily trading in the banking subsector, considering the outstanding volume of shares of 326 million in the subsector stood at N2.252tr, showed that the banking shares remained the toast of investors even as it control about 55 to 60 per cent of total market trade last week.
The volume trade in the shares of the banks owing to the large share base helps to direct the market value more especially when indicators on prices of the shares are in the positive or the negative trajectory.
The absence of debt on most balance sheets of the banks is said to be a major contributor as to why the investors are now staking their money on the stocks of banks which prior to the coming of the Asset Management Company of Nigeria (AMCON) was an anathema of sorts as nobody wanted to have anything to do with banking shares following the colossal loss of funds in the subsector.
Another factor that seems to be aiding the investment in the banks are the audited and the unaudited financial positions in the financial subsector which look promising as most of them have been able to drastically reduce to the barest minimum their exposure to Non-Performing Loans which was a major albatross to most of the banks aftermath of the near collapse of the stock market in 2008 - 2010.
How investors' quest for banking stocks started
Investors' interest in stocks at the NSE can be traced to the signing into law of the Asset Management Company of Nigeria (AMCON) Bill.
Banking stocks continue to enjoy patronage from both small and institutional investors taking positions in the shares of the banks in anticipation that the Bill will turnaround the fortunes of the financial industry.
An x-ray into the trading activities on the floor of the exchange since the commencement of business in the year showed that transaction in the banking subsector has witnessed tremendous growth percentage when compared to what obtains prior to the AMCON Bill and growth in other subsectors in the equities market in the month of January.
The banking industry, it will be recalled, was the most hit in terms of price depreciation in the value of their stocks, following exposure to toxic loans which present estimate puts it at N2.2 trillion.
The loan repayment had been a burden on the banks and even the regulatory authorities who were dazzled at the value erosion and state of the health of the banks was having on the domestic economy.
By AMCON's taking over the bad debts in the banks and giving them a new lease of life, shares in the sub sector have become the bride of
investors and the present investment in the industry has been put tentatively at over N1 trillion as at last Monday.
AMCON, a scheme introduced by the Central Bank of Nigeria (CBN) along side other regulatory agencies in the market, soaked the over N2.2 trillion bad debt incurred by banks in the country. Most of the banks' bad debts were incurred in form of margin facilities to stockbrokers/ issuing houses in the purchase of shares and investment in both the down and offshore oil business, while others were as a result of insider abuse loans by directors of the banks.
Equity transactions last week
Trading on the floor of the NSE Monday opened the week on the positive note as most blue chip stocks recorded appreciable gains.
Particularly, UTC led by five per cent to close at 84 kobo, UBN followed with a gain 4.92 per cent to close at N5.12 while Evans Medical added 4.76 per cent to close at N1.10.
On the other hand, Eterna Oil led the losers with a loss of 4.85 per cent to close at N2.55, while Custodian Insurance followed with a loss of 4.65 per cent to close at N1.23.
At the close of trading session, the NSE All-Share Index was up by 0.14 per cent or 34.53 basis points to close at 23,273.56, as against 23,239.03 recorded the previous session.
Consequently, market capitalisation appreciated by N11billion or 0.14 per cent to close at N7.407trillion as against N7.396trillion recorded the previous day as the bulls continue to suppress the bears.
The banking sub sector of the financial services sector led the market transaction volume with 142.1 million units valued at N1.2 billion exchanged in 1,847 deals.
The volume recorded in the sector was driven by transaction in the shares of FirstBank Plc and Zenith Bank Plc.
The Insurance sub sector of the financial sector, activated by the shares of Law Union and Rock Insurance, followed with a turnover of 10.7 million shares valued at N6.6million in 97 deals.
On the whole, investors staked a turnover of 207.7 million shares worth N1.6billion in 3,306 transactions.
Tuesday's trade in shares closed in the negative after the bulls ruled the market due to what some market watchers attributed to investors' profit taking.
Market operators had predicted that the bullish trend would trigger profit taking and impact negatively on the stock market.
Consequently, the NSE All-Share Index depreciated by 148.24 points or 0.6 per cent to close at 23,125.32, while the market capitalisation of equities declined to N7.360trillion from N7.407trillion, representing a drop of N47billion or 0.6 per cent.
At the close of trading, 23 stocks appreciated in price during the day, as against 20 that depreciated in value.
Flour Mills led the gainers table with a gain of N1.60 to close at N52.00 per share, while GSK Plc followed with a gain of 0.51 kobo to close at N29.51 per share, among other price gainers. On the other hand, Dangote Cement led on the price losers table, dropping by N2.50 to close at N112.50 per share while ARBICO Plc followed with a loss of 78 kobo to close at N14.83 per share, among other price losers.
Further analysis of the trading showed that the Banking sub sector was the most active during the day with 134.4 million shares worth N870.6 million exchanged by investors in 2,061 deals.
Volume in the Banking sub sector was largely driven by activity in the shares of Access Bank Plc and Diamond Bank.
The Conglomerates sub sector, boosted by activity in the shares of Transcorp Plc, followed on the day's activity chart with a sub sector turnover of 11. 4 million shares valued at N19.1 million traded in 125 deals. On the whole, investors exchanged a total of 206.9 million shares valued at N1.3 billion in 3,753 transactions.
The bearish trend continued on Wednesday to dominate market activities as speculative trading continued despite an improvement witnessed in market turnover.
The market capitalisation of 187 first-tier equities depreciated by N5.90billion as market sentiments remained negative. 114 equities were traded as against 107 previously with more activities recorded in Financial Services, ICT, Natural Resources, Conglomerates, Consumer Goods, Industrial Goods, Oil & Gas, Healthcare, Agriculture, Services and Construction/Real Estate sectors.
Particularly, four NSE sectoral indices closed negative as NSE 30 which basically measures the performance of blue chips maintained downtrend by 0.10 per cent, NSE Insurance closed with 0.33 per cent gain while NSE Oil & Gas also closed with 1.34 per cent loss. NSE banking recorded 0.09 per cent loss, while NSE Food also recorded 0.11 per cent gain. The New NSE LII closed positive with 0.08 per cent loss.
At the close of trading session in the day, the NSE All-Share Index dipped by -0.09 per cent to close at 23,105.05 as against a decline by 0.64 per cent recorded in the previous session to close at 23,125.32.
In the same vein, market capitalisation depreciated by N5.90billion to close at N7.35 trillion.
billion recorded in previous session to close at N7.36 trillion.
The number of gainers at the close of trading was 17 as against 23 recorded in the previous session, while decliners closed higher at 24 as against 20 losers recorded in the previous trading day suggesting a negative market breadth.
As usual, financial services sector led the market transaction volume with 176.87 million units valued at N1.25 billion exchanged in 2,168 deals as against 140.45 million units valued at N875.33 million exchanged in 2,194 deals recorded in previous session.
Transaction volume on the exchange moved up by 12.10 per cent to close at 231.98 million units exchanged in 3,757 deals, as against a decline by 1.33 per cent recorded in the previous trading to close at 206.94 million units exchanged in 3,753 deals.
However, trading in equities on Thursday continued on a bearish note on the NSE, as some investors sold their holdings.
Specifically, the All Share index dropped by 0.17 per cent to close at 23,066.74 points, compared to the decline by 0.09 per cent recorded the preceding day to close at 23,105.05 points.
Market capitalisation shed N12bn to close at N7.34trn, higher than the drop of N6bn recorded the preceding day to close at N7.35trn.
AG Leventis Plc led the gainers' table with 6 kobo or five per cent to close at N1.26 per share, followed by International Breweries Plc with 33 kobo or 4.99 per cent to close at N6.94 per share.
CAP Plc gained N1.20 or 4.98 per cent to close at N25.32 per share, while Redstar Express Plc appreciated by 13 kobo or 4.96 per cent to close at N2.62 per share. Berger Paints Plc rose by 34 kobo or 4.91 per cent to close at N7.27 per share.
On the flip side, Continental Insurance Plc depreciated by three kobo or 4.76 per cent to close at 60 kobo per share, while GT Assurance Plc lost 8 kobo or 4.57 per cent to close at N1.67 per share.
UTC Plc dropped by 4 kobo or 4.35 per cent to close at 88 kobo per share, while Sterling Bank Plc dipped by 4 kobo or 3.74 per cent to close at N1.03 per share. Royal Express Plc fell 2 kobo or 3.64 per cent to close at 53 kobo per share.
Transaction volume in equities increased by 7.53 per cent, as a total of 140.1 million shares worth N1.26bn were exchanged in 3,474 deals, compared to 231.9 million shares valued at N1.65bn traded in 3,757 deals the preceding day.
Cumulative trading on Friday showed that a turnover of 932.58 million shares worth N7.277 billion in 17,711 deals were recorded last week, in contrast to a total of 1.318 billion shares valued at N9.136 billion exchanged hands previous week in 19,200 deals.
There were no transactions in the Federal Government Development Stocks, State/Local Government Bonds, and Corporate Bonds/Debentures sectors.
Also traded were 5,877 units of NewGold Exchange Traded Funds (ETFs) valued at N14.36 million exchanged in 12 deals, in contrast to a total of 1,707 units valued at N4.293 million exchanged hands last week in 9 deals.
The Financial Services sector was the most active during the week (measured by turnover volume), with 703.84 million shares worth of N4.92 billion exchanged hands by investors in 10,282 deals.
Volume in the sector was largely driven by Banking sub sector led by shares of FirstBank of Nigeria Plc, Diamond Bank Plc and Zenith Bank Plc. Trading in the shares of the three banks accounted for 252.67 million shares, representing 41.13 per cent, 35.9 per cent and 27.09 per cent of the turnover recorded by the sub sector, sector and total turnover for the week, respectively.
The NSE All-Share Index (ASI) which opened at 23,239.03 depreciated 0.42 per cent to close on Friday at 23,141.08. Similarly, the equities market capitalisation opened at N7.40trillion depreciating 0.41 per cent to close at N7.37trillion.Share