Economy
Analysts Predict Fall in Banking Stocks as Skye Bank Exits NSE
By Dipo Olowookere
Last Friday, after the stock market had closed for the week, the Central Bank of Nigeria (CBN) came with a big announcement which sent shivers down the spine of investors.
Governor of the CBN, Mr Godwin Emefiele, said at a media briefing that one of the financial institutions trading its shares on the Nigerian Stock Exchange (NSE), Skye Bank Plc, had been liquidated with its assets and liabilities transferred to a bridge bank called Polaris Bank Limited.
The news came as a huge shock to observers, shareholders of the bank as well as investing public, who mostly did not see this coming.
Few months ago, the apex bank had extended the tenure of the interim management it appointed for the lender in 2016 when it took over Skye Bank. The CBN had said it extended the tenure of the new management because it was impressed with the performance of the new handlers.
Even Skye Bank, which confirmed this in a statement in July 2018, had said it was working tirelessly with the CBN to conclude various resolution initiatives to achieve a positive turn around for the bank.
“We wish to assure the bank’s shareholders and all stakeholders of the commitment of its board and management, working with the CBN and other regulators, to conclude various resolution initiatives to achieve a positive turn around for the bank and deliver value to its stakeholders,” the statement signed by Skye Bank’s Secretary/General Counsel, Mr Babatunde Osibodu, had stated.
Last month, the lender also released another statement had assured its shareholders that, “As with the Bank’s Audited Financial Statements for previous financial years (2016 and 2017), the Unaudited Financial Statements for the period ended June 30, 2018 shall be published as soon as the CBN grants its approval.”
“We wish to assure all our stakeholders that the bank remains committed to transparency, full disclosure, and compliance with regulatory requirements,” it had further assured.
But since last Friday’s announcement, many investors have been talking about how Skye Bank got itself into a mess, while some shareholders have been licking their wounds with their tails between their legs.
Already, the NSE has announced suspending trading on the shares of Skye Bank on its platform beginning from Monday, September 24, 2018 (today).
As the market resume today, analysts at Business Post are forecasting that investors will brutally whip banking stocks this week because of the Skye Bank issue.
Few of those that may be fatally wounded include Diamond Bank and Unity Bank, while others may not be spared too from the onslaught.
Last week, Unity Bank and Skye Bank were among the best performing stocks, gaining 17.70 percent and 15.50 percent respectively.
Before Skye Bank collapsed, it was recording a steady growth, which some investors misinterpreted to be something good cooking. However, they got their fingers burnt.
With this in mind, Unity Bank, which has been gathering momentum lately, may likely be viewed by investors in the same light with the defunct Skye Bank, resulting into selloffs.
It is important to note that Unity Bank is yet to release its financial statements for the year 2017 as well as for two already used quarters of this year.
We believe that as the market resumes today, the banking stocks are in for a big trouble with selloffs expected in the sector.
However, analysts at Cowry Asset believe that the NSE index will close positive at the end of the week “as we expect both domestic institutional and retail investors to take advantage of the fallen prices.
“More so, we maintain that investors should hunt for companies with potentially high dividend yields and have recorded increased earnings as at H1 2018.”
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed higher by 1.41 per cent on Friday, May 15, supported by four securities on the platform.
During the session, FrieslandCampina Wamco Plc added N14.24 to its share price to sell for N159.00 per unit, in contrast to the previous day’s N144.76 per unit.
Further, Central Securities and Clearing System (CSCS) Plc appreciated by N1.34 to N72.34 per share from N71.00 per share, Geo-Fluids Plc improved its price by 4 Kobo to N2.94 per unit from N2.90 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to trade at 61 Kobo per share compared with Thursday’s closing price of 60 Kobo per share.
As a result, the NASD Unlisted Security Index (NSI) rose by 58.20 points to 4,188.41 points from 4,130.21 points, and the market capitalisation soared by N34.82 billion to N2.506 trillion from N2.471 trillion on Thursday.
During the session, the volume of trades went up by 180.8 per cent to 1.2 million units from 417,349 units, and the value of transactions increased by 29.8 per cent to N29.8 million from N23.2 million, while the number of deals fell by 22.6 per cent to 24 deals from 31 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units valued at N1.9 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
By Dipo Olowookere
The bears overpowered the Nigerian Exchange (NGX) Limited on Friday, sinking it further by 0.76 per cent when the closing gong was struck by 4 pm.
The nation’s flagship equity market was under selling pressure during the session, as investors booked profits after the shares witnessed price appreciation in the past trading sessions.
The energy sector was the most impacted, as it shed 4.43 per cent. The consumer goods index declined by 0.90 per cent, the banking counter decreased by 0.15 per cent, and the industrial goods sector lost 0.08 per cent, while the insurance counter gained 2.42 per cent, which was not enough to salvage the situation.
Consequently, the All-Share Index (ASI) contracted by 1,912.19 points to 250,330.92 points from 252,243.11 points, and the market capitalisation moderated by 1.225 trillion to N160.444 trillion from N161.669 trillion.
Zichis was the worst-performing stock for the session after it gave up 9.97 per cent to close at N29.43, FTN Cocoa slipped by 9.95 per cent to N8.96, The Initiates slumped by 9.90 per cent to N32.30, LivingTrust Mortgage Bank tumbled by 9.88 per cent to N3.83, and International Energy Insurance dropped 9.71 per cent to trade at N2.79.
The best-performing stock was ABC Transport, which grew by 10.00 per cent to N6.27. May and Baker also appreciated by 10.00 per cent to N47.30, SCOA Nigeria surged by 9.98 per cent to N33.05, Trans-Nationwide Express expanded by 9.97 per cent to N7.06, and DAAR Communications jumped 9.76 per cent to N2.25.
Yesterday, investors traded 1.1 billion shares worth N44.3 billion in 65,744 deals compared with the 1.0 billion shares valued at N41.6 billion transacted in 74,822 deals a day earlier. This indicated a dip in the number of deals by 12.13 per cent, and a rise in the trading volume and value by 10.00 per cent and 6.49 per cent, respectively.
Chams was the busiest equity for the day, with 328.5 million units sold for N1.1 billion. UBA traded 61.6 million units worth N2.7 billion, First Holdco transacted 58.7 million units valued at N4.2 billion, Secure Electronic Technology exchanged 51.9 million units worth N45.0 million, and Access Holdings traded 51.8 million units valued at N1.3 billion.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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