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Nigerian banks are likely to prepare to resume share issuances to meet new capital requirements mandated by the Central Bank of Nigeria (CBN), market analysts told Daily Sun on Monday.
This is coming after bank stocks like Fidelity Bank, Access Bank and Zenith Bank, trading on the floor of the Nigerian Exchange Limited (NGX) accounted for 1.351 billion shares worth N20.222 billion in 6,631 deals, hence contributing 51.31 per cent and 46.33 per cent to the total equity turnover volume and value respectively.
Despite the shortened trading week due to Nigeria’s democracy day celebration, bullish sentiments returned to the domestic bourse following renewed interest in banking stocks. Specifically, bargain hunting activities in Zenith Bank (+8.3 per cent) and GTCO (+5.6 per cent) drove the market’s All Share Index (ASI) up by 0.7 per cent week-on-week (w/w) to close at 99,925.29 points.
Consequently, the Month-to-Date (MtD) and Year-to-Date (YtD) returns increased to +0.6 per cent and +33.6 per cent, respectively while market capitalisation grew to N56.527 trillion from the week’s opening value of N56.128 trillion, this representing a gain of N399 billion.
Similarly, performance across sectors of the market was largely bullish following gains in the Oil and Gas (+5.3 per cent), Banking (+3.6 per cent), Insurance (+3.4 per cent), Consumer Goods (+1.1 per cent) and Industrial Goods (+0.3 per cent) indices.
The banking index has been down by -4.93 per cent last week but renewed interest from investors turned the tide.
This has led to reports that following the gain in the banking index, banks who might be willing to bolster their capital base to meet the Central Bank of Nigeria (CBN)’s recapitalisation directive and prepare for the future growth, may likely kick-start share issuances this week.
This move, the CBN said, is intended to strengthen the financial system against external and domestic shocks and improve stability.
Daily Sun had reported that shareholders of some banks had approved their proposals to raise capital to be able to meet up with the apex bank’s directive.
Speaking on the development, analysts at Cordros Research, noted that they expect the overall market sentiment to be mixed especially given the lack of significant drivers to buy investors’ interest over the near term before the earnings season.
“One potential factor that could change the direction of activities may be upcoming share issuances by banks. Notwithstanding, we advise investors to trade cautiously over the near term in fundamentally justified names”, they said.
Corroborating, analysts at Cowry Asset Management, said, a mixed trend mixed with profit taking is expected whilst sector rotation and portfolio rebalancing will continue on the exchange in anticipation of the earning season.
