Nigeria’s biggest lenders were the toasts of investors on Tuesday as bargain hunters approached major sectors of the Nigerian Stock Exchange (NSE) to take advantage of cheap valuations and high dividend yields, even as selling pressures in some large-cap stocks slipped the market into its longest bear run in 8 months.
The country’s most-capitalised bank, Guaranty Trust Bank Plc, was the most traded stock by volume on the Lagos bourse after 33 million shares valued at N1.03 billion exchanged hands. Zenith Bank trailed with a turnover of 27 million shares worth N537.8 million, while 23 million units of Access Bank’s shares valued at N156 million were transacted.
“Their dividend yields were attractive after the close of business on Monday,” said Gbolahan Ologunro, an equity research analyst at CSL Stockbrokers Limited. “There was a broad-based selloff on most of the banks’ stocks on Monday.”
Similarly, 19.4 million units of United Bank for Africa’s (UBA) shares worth N120 million were traded, while 8.89 million shares of First Bank of Nigeria Holdings valued at N64.6 million were bought and sold at Tuesday’s trading session.
Banking stocks recorded the biggest gain of 1.29 percent. The NSE Oil & Gas sector rose by 0.68 percent, while insurance stocks gained marginally by 2 basis points.
Guaranty Trust Bank jumped 1.94 percent from its two-year low to close at N31.60. Zenith Bank rose by 1.52 percent from its lowest level in 8 months to N20, Access Bank gained 1.49 percent to N6.80, while UBA appreciated by 2.50 percent to settle at N6.15 per share.
The high volume of trade recorded by Access Bank and UBA came after the Morgan Stanley Capital International (MSCI) downgraded the stocks to low cap in its recent review of the frontier market index, a move which may have prompted investors to rebalance their portfolios, according to Ologunro.
The MSCI Frontier Markets Index captures large and mid-capitalised stocks across 29 frontier markets counties. The index includes 116 constituents, covering about 85 percent of the free float-adjusted market capitalization in each country.
However, First Bank of Nigeria Holdings reversed its previous gains, shedding 3.33 percent to close N7.25 at the sound of closing gong on the NSE. This, alongside a 3.48 percent decline in Nestle Nigeria to N1,430, triggered the general bearish performance recorded at the stock market, causing it to fall 47 basis points to book its longest losing streak since September 2018.
As a result, the year to date return of the market worsened to 9.5 percent with investors losing N23.2 billion as the market capitalisation of traded equities, which opened at N10.7 trillion, fell further to N10.67 trillion.
In spite of this, analysts at Lagos-based investment house, Afrinvest Securities Limited, expressed optimism over a market rebound this week owing to strengthened market sentiment as 20 stocks advanced as against 16 that declined.