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Shareholders in four tier-1 Nigerian banks lose N35.7 billion as sell pressure deepens  

As low sentiment persists in the nation’s capital market, sell pressure witnessed on shares of Zenith Bank Plc, Access Holdings Plc, FBNH Plc and UBA Plc in four trading sessions has resulted in investors of the banks losing about N35.685 billion at the close of trading on 15th August. 

Checks by Nairametrics showed that FBN Holding Plc dropped by 4.25% to N10.15 per share, from N10.60, which was the opening share price on 12th September, while Zenith Bank Plc shed 1.99% to N19.65 per share, from share price of N20.05 at the commencement of the current year trading on September 12. UBA Plc dropped by 1.32% to N7.45 per share, from N7.55 per share it opened trading on Monday 12 September. Access Holdings trailed with a decline of 1.13% to N8.75 per share, from N8.85 per share during the period under review.   

Investors in the stock market had hoped that the release of the half-year 2022 results of the nation’s leading banks, which witnessed improved performances on various parameters like credit growth, asset quality, and profitability would boost market sentiment. 

Pre-election years are usually characterized by negative sentiments, which also result in the exit of foreign investors. 

Market experts believe that domestic investors’ sentiment is usually weak as they seek to reduce their market exposure when elections draw closer. The intensity of the impact is usually a function of the degree of political tension and uncertainty generated by political activities. 

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Also, the relentless sale pressure by foreign portfolio investors (FPIs) is on the back of high commodity inflation that happened due to the Russian-Ukraine War, which led to a spike in interest rates and, in turn, led to a jump in bond yields in the US and other developed markets. 

Foreign institutional investors invest in Nigeria’s stocks or other emerging markets’ when they have excess liquidity (low borrowing costs). However, if bond yields rise in the US, money will move away from emerging markets. 

Performance of the banks’ share prices  

  • FBN Holding Plc closed its last trading day (Thursday, September 15, 2022) at N10.15 per share and N364.337 billion in market capitalisation on the Nigerian Stock Exchange (NGX) as against N10.60 per share and N380.490 billion in market capitalisation at the beginning of trading on September 12, hence has earned a loss of N16.152.88 billion or 4.25%. 
  • Zenith Bank Plc also closed its last trading day (Thursday, September 15, 2022) at N19.65 per share and N616.941 billion in market capitalisation on the Nigerian Stock Exchange (NGX) in contrast to the opening figure of N20.05 per share and N629.499 billion in market capitalisation at the beginning of trading on 12th September. The bank has since lost 1.99% and N12.558 billion in market capitalisation. 
  • UBA Plc also closed the last trading day at N7.45 per share and N254.785 billion in market capitalisation, compared to the opening figure of N7.55 per share and N258.205 billion in market capitalisation, hence has earned a loss of N3.419 billion or 1.32%. 
  • Access Holding closed its last trading day at N8.75 per share and N311.020 billion in market capitalisation on the Nigerian Stock Exchange (NGX) as against N8.85 per share and N314.575 billion in market capitalisation at the beginning of trading on September 12, hence has earned a loss of N3.554 billion or 1.13%. 

What stakeholders are saying to move the market forward 

  • Chairman of the senate committee on finance, Senator Solomon Olamilekan Adeola, called on the Securities and Exchange Commission to find solution that will change the investment apathy that is making the Nigerian Capital market lose steam and explore ways to further deepen the capital market in a bid to attract more local investors, especially young Nigerians. 
  • According to him, “You have done well, I must commend you. I commend you for your efforts in repositioning that agency from a point of deficit after paying salaries to a point of profit now and to the extent of contributing to the coffers of government, I commend you. 
  • “But going forward, there is still a lot to be done at the SEC and I believe that you will try your best. So many people are not interested in the Nigerian capital market again; it is losing steam. Even in other world economies market no one is patronising them because it is not the best of times, but I want you to see ways in which you can encourage local investors to our capital market.  
  • “That is one area you should spread your tentacles to, let the young people know that if they put money in the market, in the shortest possible time they can access their profit. You have done well, but there is always room for improvement. It is that improvement we are trying to emphasise now and we think you are getting it right now; we hope God will guide you in your quest to turn around the fortunes of the SEC”. 
  • Temi Popoola, Chief Executive Officer, NGX said: “The Exchange is positioned to solve challenges in the capital market, a step we believe sets us ready for the future. Through technology, we are repositioning the Exchange in our interaction with issuers and other capital market stakeholders. In December 2021, we successfully introduced the first digital offer platform that attracted a large amount of retail participation from the younger Nigerian demography”. 
  • Popoola also noted that the strategic direction for the Exchange is to attract the underbelly of the Nigerian economy and Nigerians in Diaspora, giving other product options to those interested in digital assets and not stocks. 
  • GMD, UBA, Mr. Oliver Alawuba talked about the need to do a lot in ensuring millennials and Gen Z key into opportunities at the Exchange. “We need to collaborate on Digital Banking to ensure the younger generation can conveniently buy into the stocks traded on the Exchange for enormous opportunities. We are also open to collaborate with NGX to attract the Diaspora community to invest in the Nigerian capital market.” 

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