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By Chinwendu Obienyi
Amid the recapitalisation directive from the Central Bank of Nigeria (CBN), investors interest in Nigeria’s banking stocks drove the counters prices higher on resumption of trading activities on the floor of the Nigerian Exchange Limited (NGX) on Tuesday.
The market decreased slightly by 0.04 per cent as the domestic bourse opened Tuesday for another four-day trading this week after the Public Holidays to commemorate Easter celebration.
At the close of trading, the Nigerian Exchange Limited (NGX) All Share Index (ASI) and equities market capitalisation decreased further from March 28 lows of 104,562.06 points and N59.120 trillion respectively to 104,518.14 points and N59.095 trillion. The market’s positive return year-to-date (YtD) decreased slightly to 39.78 per cent.
Despite the negative footing, banking stocks like Access Holdings, GTCO, Fidelity Bank, Unity Bank and Zenith Bank rallied on the domestic bourse.
These stocks and other counters were on buyers list despite last minute profit taking by investors which pushed the market southwards.
Furthermore, GTCO, Access Holdings, UBA, Zenith Bank and Fidelity Bank were actively traded stocks at the close of trading.
The interest from investors in banking stocks can be attributed to the apex bank’s recent directive. The apex bank in its guideline amid its new capital thresholds states that international, national, and regional banks are to maintain minimum share capital of N500 billion, N200 billion, and N50 billion, respectively.
According to the circular, “for existing banks, the capital requirements specified above shall be paid-in capital (Paid-up plus Share Premium) only. Bonus issues, other reserves and Additional Tier 1 (AT1 Capital shall not be allowed or recognized for the purpose of meeting the new minimum capital requirements”.
Reacting to development, analysts at United Capital Plc, said, “We expect bargain hunting activities to continue, with the recent release of a flurry of full year 2023 audited financial statements, and corporate actions.
We expect a sustained southward trend of short-term rates in the fixed income market to motivate further bullish sentiments toward equity investments at different intervals”.
For their part, analysts at Cordros Research, said, “Given the outcome of the MPC meeting, we believe the hawkish stance of the MPC will continue to intensify risk-off sentiments in the local bourse, particularly among domestic investors.
However, we believe earnings releases from the banks and accompanying dividend declarations could trigger another wave of positive sentiments, supporting buying activities on the bourse”.
