Economy
Nigerian Banks Lead In Equities’ N372b Loss
By Dipo Olowookere
Banking stocks suffered the most among 25 top losers in the equities’ market as share price decline left investors with a net capital loss of N372 billion.
There were 10 banking stocks among the top 25 that lost 30 per cent and above in the past eight months. Some of the top losers recorded as much as 60.1 per cent in equities price reduction.
Conversely, only one banking stock made the few top gainers’ within the period. Altogether, there are 15 banking stocks quoted on the Nigerian stock market.
Three other banking stocks recorded various gains, while a bank dropped by 12.3 per cent.
The Nation’s market intelligence at the weekend indicated that investors in banking stocks have suffered the highest losses with nearly three-quarters of quoted banking stocks running with double-digit losses. Losses in the banking sector generally significantly outweighed the overall market’s average loss, according to data review by The Nation.
The benchmark indices for the Nigerian stock market indicated eight-month average decline of 3.64 per cent, equivalent to a loss of N372 billion.
Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) closed August at N9.479 trillion as against its year’s opening value of N9.851 trillion. The All Share Index (ASI), which tracks prices at the Exchange, dropped to 27,599.03 points by the month-end as against its year’s opening index of 28,642.25 points.
Banking stocks were deep in the red with the troubled Skye Bank leading the top 25 losers with year-to-date loss of 60.13 per cent. The Central Bank of Nigeria (CBN) had sacked the board and management of Skye Bank over corporate governance issues. Diamond Bank followed with a loss of 54.35 per cent.
Other top losers in the banking sector included Ecobank Transnational Incorporate, -31.3 per cent; Fidelity Bank, -40.67 per cent; Sterling Bank, -49.18 per cent; Union Bank of Nigeria, -39.13 per cent; Unity Bank, -30.36 per cent; Wema Bank, -34.0 per cent; FBN Holdings, -40.53 per cent and FCMB Group, which market value had dropped by 39.64 per cent.
Stanbic IBTC Holdings meanwhile dropped by 12.3 per cent within the period.
While consolidation, steep price declines and emergence of highly capitalised non-bank stocks such as Dangote Cement had reduced the hitherto overwhelming dominance of the market by banking stocks, banking stocks still account for some 25 per cent of the total market value of the Nigerian equities market.
Head, financial advisory group, GTI Capital Group, Mr Kehinde Hassan, said the negative performance of the banking sector was weighing heavily on the overall market performance.
He noted that the unstable policy environment and the knee-jerk approach of the Central Bank of Nigeria (CBN) to regulatory decisions have compounded the tough operating environment for banks, many of which had warned of lower earnings due to the headwinds.
Only Guaranty Trust Bank (GTB) ranked within the top gainers’ list with 8-month gain of 45.76 per cent. United Bank for Africa (UBA) meanwhile posted a heart-warming return of 28.7 per cent. Access Bank followed with 14 per cent while Zenith Bank, against all expectations, trailed with a modest gain of 6.05 per cent.
Other top losers for the period included Livestock Feeds, -33.1 per cent; UACN Property Development Company, -42.5 per cent; Honeywell Flour Mills, -35.12 per cent; Vitafoam Nigeria, -43.99 per cent; AIICO, -30.77 per cent; Union Homes and Savings, -39.24; Fidson Healthcare, -32 per cent; GlaxoSmithKline Consumer Nigeria, -45.88 per cent; Berger Paints, -31.1 per cent; Cement Company of Northern Nigeria, -35.8 per cent; Lafarge Africa, -40.1 per cent; Portland Paints and Products Nigeria, -53.2 per cent; Forte Oil, -47 per cent; Tourist Company of Nigeria, -43.1 per cent and Caverton Offshore Support Group, which lost 40.9 per cent.
Nigerian equities have writhed under sustained losses in the past 32 months. Aggregate market value of all quoted equities on the NSE closed 2015 at N9.851 trillion as against its opening value of N11.478 trillion for the year, representing a loss of N1.627 trillion. The ASI indicated a negative full-year average return of -17.36 per cent. The ASI closed 2015 at 28,642.25 points as against its opening index of 34,657.15 points.
The losses in 2015 worsened the downtrend that had in 2014 marked out Nigerian equities among the worst-performing stocks globally with average full-year decline of 16.14 per cent. Aggregate market value of all quoted equities had closed 2014 at N11.478 trillion as against its opening value of N13.226 trillion for the year, indicating a loss of N1.75 trillion during the year.
Altogether, investors have lost more than N3.75 trillion in the past 32 months as the stock market groaned under political tension, steep decline in crude oil prices, foreign exchange crisis, uncertain policies and other domestic and global macroeconomic concerns.
The second half of 2016 has however seen considerable share price recovery compared with the steep losses in the first half. In the first quarter alone, Nigerian equities had recorded a net loss of N1.15 trillion.
Notwithstanding the negative overall market situation, many stocks have posted substantial returns so far this year. Dangote Flour Mills, which saw the re-emergence of Aliko Dangote’s Dangote Industries Limited as the core investor, recorded the highest gain of 240.7 per cent. E-Tranzact followed with a gain of 97.4 per cent. United Capital returned 74.8 per cent while Total Nigeria posted eight-month return of 63.3 per cent. Other top gainers included Presco, 37.2 per cent; AG Leventis, 43.6 per cent; Union Dicon Salt, 39.3 per cent; Neimeth International Pharmaceutical, 32.6 per cent; DN Meyer, 30 per cent; Seplat Petroleum Development Company, 49.4 per cent; Eterna, 33.7 per cent and RAK Unity, a second-tier stock that posted a year-to-date return of 61.3 per cent.
By Aduragbemi Omiyale
A former deputy Governor of the Central Bank of Nigeria (CBN), Mr Kingsley Moghalu, has attributed the failure of the Naira redesign policy of the apex bank to the lack of effective risk management, its use as a political tool and others.
Last October, the central bank Governor, Mr Godwin Emefiele, announced that the designs of the N200, N500, and N1,000 denominations would be changed.
In a special press briefing, he disclosed that the new notes would be introduced into the banking system by December 15, while the old currency notes would cease to be legal tender from January 31, 2023.
However, the deadline was moved forward to February 10, and on March 3, the supreme court extended the deadline to December 31, 2023, meaning the old notes will remain valid by the end of the year.
From February 10 till now, Nigerians have been unable to have access to cash as commercial banks limit what customers can withdraw via their channels. In some cases, customers are limited to N1,000, N2,000, and N5,000 cash withdrawals, forcing them through an untold hardship and making a mess of the Naira redesign and cashless policies of the CBN.
While speaking on the issue, Mr Moghalu blamed his former employers for the failure of the policy, noting that they did not put the system under thorough scrutiny.
“The terrible suffering and economic loss Nigerians have experienced as a result of the faulty IMPLEMENTATION of the Central Bank of Nigeria’s Naira redesign policy, the entry of the judiciary into central banking functions, all show clearly how our institutions— and Nigeria — fail when institutions that are meant to be operationally independent become politicized.
“Currency functions are a core part of any central bank’s mandate. To that extent, I had no problem with the policy, except for two vital issues. First, the 90-deadline, which I warned, was too short to be effectively executed. Second, the timing is so close to the elections.
“But, as later became clear, there was a haphazard and incoherent communication of the PURPOSES of the policy. In one breath, it was said to be to reduce the money supply and help tame inflation (after the bank had created and lent N23 trillion to the federal government illegally because that was way beyond approved limits under the CBN Act of 2007). Next, it was promoted as a national security measure to halt kidnapping, Naira hoarding and sundry crimes. Then, next, it became about free and fair elections to stop vote-buying.
“This last reason became the most important — and controversial — reason as the tempo of the 2023 presidential contest rose to boil point. Expectedly, politicians who felt the policy targeted them complained loudly and wanted the deadline extended, while those who believed it helped their own political agendas hailed the tight and impractical deadline and did not want it moved.
“Nigerians were trapped between the devil and the deep blue sea of a desire to curb the menace of vote-buying and the effective confiscation of their own money by the implementation failure of the policy.
“While increasing digital payments, another purported goal of the policy, was a good one, that thinking failed to consider the reality that the payment infrastructure was still not robust in many rural areas of our country, that cash remains king, and, as I said on an interview with @LadiAAle of @channelstv, we were carrying on as if it has now become a crime to use cash in Nigeria. Most important, as I raised the question in that same interview, what exactly is the mandate of the CBN? Had it now become to end vote buying in elections? Surely, we have anti-corruption institutions vested with such mandates, and to use the CBN for that primary purpose was to politicize the institution.
“But many Nigerians, as usual, did not think deeply about the implications of this line of thinking and action because of their political passions against presumably corrupt politicians.
“Today, whatever may have been the benefits of the Naira redesign policy have been cancelled out by the economic and social gridlock it has created. We are still suffering from it after the almighty presidential election has come and gone.
“There are several lessons here. One such lesson is the importance of effective risk management, which was evidently absent in the conception and execution of the policy.
“I had highlighted this in a previous intervention. But there is the fundamental lesson of whether our institutions in Nigeria have been hijacked and subverted from serving the Nigerian people and our economy to serving personal and political agendas, including a dishonest use of a war against corruption as an attractive shiny object.
“One day, we will count the losses to the Nigerian economy, the legitimacy and effectiveness of a once-prestigious institution, and to the legitimacy of the Nigerian state itself, of the partisan politicization and de-professionalization of the leadership of the CBN.
“Our apex bank, along with the judiciary, is one of the key institutional prisms through which foreign countries and investors abroad and at home assess the functioning or otherwise of the Nigerian state. Turning it into a political football was and is a big mistake, and a strong indicator of state failure,” he wrote via his verified Twitter page.
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc and 11 Plc suffered losses on Thursday, causing the NASD Over-the-Counter (OTC) Securities Exchange to deflate by 0.22 per cent.
The duo overturned the gains recorded by FrieslandCampina WAMCO Nigeria Plc and Geo-Fluids Plc.
Data obtained by Business Post showed that CSCS Plc lost 5 Kobo to quote at N14.00 per unit versus the previous day’s N14.05 per unit, while 11 Plc lost N10 to close at N140.00 per unit compared with Wednesday’s value of N150.00 per unit.
On the flip side, FrieslandCampina appreciated by 59 Kobo to finish at N76.00 per share versus the previous closing price of N75.41 per share, as Geo-Fluids Plc gained 14 Kobo to close at N1.64 per share as against the previous day’s N1.50 per share.
At the close of transactions, investors lost N2.11 billion as the value of the OTC stock market closed at N959.06 billion, in contrast to the midweek’s N961.17 billion.
Following the same trend, the NASD Unlisted Securities Index (NSI) decreased at the close of trades by 1.61 points to 729.87 points from 731.48 points.
It was observed that the volume of securities traded in the session went down by 77.2 per cent to 5.2 million from 23.1 million units, the value of stocks expanded by 139.5 per cent to N24.3 million from N10.1 million, while the number of deals increased by 7.7 per cent to 14 deals from 13 deals.
Geo-Fluids Plc remained the most traded stock by volume on a year-to-date basis with 460.3 million units valued at N501.9 million, UBN Property Plc transacted 365.8 units worth N309.5 million, while IGI Plc was in third place with 71.1 million units valued at N5.1 million.
Conversely, VFD Group Plc was the most traded stock by value on a year-to-date basis with 7.3 million units worth N1.7 billion, Geo-Fluids Plc has transacted 460.3 million units valued at N501.9 million to retained second place, while UBN Property Plc was in third place with 365.8 million units worth N309.5 million.
By Adedapo Adesanya
The Nigerian Naira depreciated on the American Dollar at the Peer-2-Peer (P2P), the Investors and Exporters (I&E), and the black market segments of the foreign exchange (FX) market on Thursday, March 24.
In the P2P market, the value of the local currency fell by N2 to sell at N755/$1 compared to the previous trading session’s exchange rate of N753/$1.
Also, in the official FX window, the domestic currency lost 17 Kobo or 0.04 per cent to quote at N461.67/$1 during the session, in contrast to the preceding day’s value of N461.50/$1.
The Naira weakened against the greenback yesterday amid a moderation in the value of forex trades achieved. The turnover stood at $80.03 million, 81.5 per cent or $351.74 million lower than the $431.77 million reported a day earlier.
In the parallel market, the depreciated against the US Dollar on Thursday by N1 to quote at N742/$1 compared with Wednesday’s N741/$1.
In the same vein, in the interbank segment, the Nigerian currency depreciated against the British Pound Sterling by N1.42 to close at N566.08/£1 versus the midweek session’s N564.66/£1.
Similarly, the Naira lost 73 Kobo against the Euro during the trading session to sell at N497.72/€1 compared with the previous day’s rate of N496.99/€1.
Meanwhile, yesterday, the cryptocurrency market shrugged off the US Federal Reserve’s 25-basis point rate hike and ongoing concerns about the banking sector and future monetary policy decisions.
Bitcoin (BTC), the largest cryptocurrency by market capitalization, jumped 2.4 per cent to sell at $28,295.37, as its rival, Ethereum (ETH), went up by 3.6 per cent to quote at $1,812.05.
Litecoin (LTC) grew by 9.0 per cent to $95.58, Dogecoin (DOGE) went up by 2.9 per cent to $0.0768, Solana (SOL) improved by 2.5 per cent to $22.04, Ripple (XRP) recorded a 2.3 per cent appreciation to trade at $0.435, Cardano (ADA) gained 1.5 per cent to settle at $0.3667, and Binance Coin (BNB) added 1.3 per cent to its value to finish at $326.77, while the United States Tether (USDT) and Binance USD (BUSD) remained unchanged at $1.00 each.
