Banking stocks drag the market to a negative close

Bearish sentiments pervaded activities on the Nigerian Exchange Limited (NGX) following a sell-off in banking stocks that resulted in N119 billion losses for investors during the week.

Banking stocks such as Access Corporation (formerly Access Bank Plc) (-6.2%), United Bank for Africa (UBA) Plc (-6.0%), FBN Holdings Plc (-5.7%), Union Bank of Nigeria (UBN) Plc (-4.2%), and Zenith Bank Plc (-1.5%) dragged the market down for the second week in a row.

As a result, the market capitalisation of all listed equities fell by N119 billion (0.44 percent) to N26.686 trillion, down from N26.805 trillion the previous week.

Likewise, the NGX All Share Index (ASI) fell 0.44 percent to close at 49,475.42 points.

Activity levels were weak, as trading volume and value declined by 24.3 percent and 14.1 percent to close at 719.389 million units and N8.004 billion from 949.819 million units and N9.329 billion respectively.  

Sectoral performance was negative as all the five sectors posted losses with the banking sector leading the pack with a 3.3 percent decline.

This was followed by the insurance (-2.6%), consumer goods (-0.3%), industrial goods (-0.2%) and oil & gas sector (-0.2%).

According to Cordros Capital analysts, “we expect alpha-seeking investors to rotate their portfolios towards cyclical stocks that delivered decent earnings during the Q2-22 earnings season amid the yield uptick in the fixed income market.” They maintained, however, that the lack of a near-term catalyst would likely skew overall market sentiment to the negative side, especially as the political landscape heated up. They emphasised the importance of investing in fundamentally sound stocks, stating that the unimpressive macro environment continues to be a significant headwind for corporate earnings.

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