Financial Services Stocks Plunge, Dragging Local Bourse by N257bn Last Week

The Nigerian Exchange Limited (NGX) closed in the red last week as stocks of FBN Holdings Plc, Ecobank Transnational Incorporated, and other financial services stocks plummeted.

The market capitalisation of all the listed equities declined by N257 billion to N34.069 trillion while the All-Share Index shed 470.68 base points or 0.75 percent settled at 62,569.73.

The spotlight of the week fell on Ecobank Nigeria Limited and FBN Holdings, who found themselves entangled in a dispute over the recent acquisition of FBN Holdings shares by an entity associated with renowned businessman Oba Otudeko, the former chairman of FBN Holdings.

The disagreement reportedly revolves around an alleged unsettled debt of N13.5 billion. This confrontation added to the existing market uncertainties and cast a shadow over the financial sector’s future.

Unfortunately, last week’s performance showcased a downward trend in most indices, with the NGX Oil and Gas, NGX Lotus II, and NGX Industrial Goods Indices being the only exceptions as they appreciated by 1.43 percent, 0.72 percent, and an impressive 9.01 percent, respectively.

On the other hand, the NGX ASeM and NGX Sovereign Bond Indices ended the week unchanged.

The volume of stocks traded witnessed a significant decline of 46.64 percent, as investors navigated a total of 5.246 billion shares valued at N63.417 billion in 57,234 deals, compared to the previous week’s figures of 9.831 billion shares valued at N145.408 billion in 54,478 deals.

This substantial drop in trading activity further emphasized the cautious approach adopted by market participants.

Analyzing the equity turnover by industry, the Financial Services Industry dominated both the volume and value categories. With 3.494 billion shares worth N38.032 billion traded in 28,633 deals, this sector contributed 66.60 percent and 59.97 percent to the total equity turnover volume and value, respectively.

The Conglomerates Industry followed with 451.410 million shares worth N2.186 billion in 3,147 deals, while the ICT Industry recorded a turnover of 332.705 million shares worth N5.638 billion in 4,207 deals.

The top three equities by volume were United Bank for Africa, Transnational Corporation Plc, and FBN Holdings Plc. The three accounted for a combined 1.222 billion shares worth N15.523 billion in 8,260 deals and contributed 23.28 percent and 24.48 percent to the total equity turnover volume and value, respectively.

The gainers’ table during the week was topped by Daar Communications, whose shares surged by an impressive 50 percent to close at N0.30. This was followed closely by John Holt with a gain of 44.80 percent to close the week at N1.81.

Nascon Allied Industries Plc witnessed a rise of 22.49 percent, closing at N28.05, driven by the anticipation of an impending merger with Dangote Sugar Refinery and Dangote Rice.

However, the financial services sector dominated the losers’ table, with FBN Holdings experiencing a significant dip of 22.17 percent, closing at N15.80.

Ecobank’s stocks followed suit, losing 23.03 percent to close at N12.70. Wema Bank saw its share value decline by 25.55 percent, closing at N4.05, while Sterling Holdco dropped by 25.42 percent to close at N3.11.

Fidelity Bank also suffered, with its stocks witnessing a dip of 24.97 percent, closing at N6.70. In addition, Access Holdings saw its shares depreciate by 20.27 percent, closing at N14.95, despite reports of expansion plans across several African countries.

With last week’s market performance leaving investors concerned, market participants will closely monitor the resolution of the Ecobank Nigeria and FBN Holdings dispute, as well as the overall stability and resilience of the financial services sector in the coming weeks.