Three banks drive sector’s 81.5% contribution to market turnover

Three bank stocks – Sterling Bank Plc, Access Holdings Plc and Guaranty Trust Holding Company Plc (GTCO) – drove activities in the financial services sector of the Nigerian Exchange Limited (NGX) last week.

The financial sector maintained its dominance in volume terms with 663.8 million shares valued at N5.5 billion traded in 7,240 deals, contributing 81.5 per cent to the total equities turnover.

Trading in the top three banks (measured by volume) accounted for 394.9 million shares worth N2.8 billion in 2,274 deals, contributing 48.51 per cent to the total equities volume.

Following the financial sector in volume terms last week was the ICT Industry with 44.4 million shares worth N4.5 billion in 1,136 deals. The consumer goods industry ranked third with a turnover of 27.4 million shares worth N1.2 billion in 3,051 deals.

On the whole, a turnover of 814.1 million shares worth N12.2 billion was recorded in 15,488 deals by investors on the floor of the exchange, in contrast to a total of 1.2 billion units valued at N15.2 billion that changed hands in 15,317 deals on December 9, 2022.

Reacting to market performance, analysts at Investdata Consulting Limited said: “NGX index sustained its strong momentum due to the prevailing high dividend yields in the stock market, following the ongoing Santa Claus rally and expected year-end window dressing by fund managers, and listed companies who desire to close the year higher.

“Position-taking will continue ahead of the full-year earnings season, while bargain hunters and speculators continue to take advantage of any pullback or sell-off to buy low ahead of future capital appreciation.

“Therefore, investors should target companies with a consistent track record of dividend payment with strong fundamentals and growth prospects that will support further price appreciation and payout.”

Cordros Capital said: “In the short term, we still see scope for expansion in valuation multiples, as positioning by early birds in dividend-paying stocks ahead of 2022FY dividend declarations should outweigh profit-taking activities.

Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”

On the price movement chart, bargain hunting in some banking stocks namely (Zenith Bank +10 per cent, Fidelity Bank: +2.4 per cent; FBNH: +0.9 per cent; Stanbic IBTC +0.8 per cent) and WAPCO (+3 per cent) causing the MTD and YTD returns to increase to +3.5 per cent and +15.5 per cent, respectively.

The NGX All-Share Index and market capitalisation appreciated by 0.8 per cent to close the week at 49,316.29 and N26.861 trillion respectively.

Similarly, all other indices finished higher except NGX consumer goods, NGX growth and NGX sovereign bond indices, which depreciated by 0.2 per cent, 0.52 per cent and 0.44 per cent respectively.

Thirty-two equities appreciated during the week, higher than 31 equities in the previous week. 28 equities depreciated higher than 26 in the previous week, while 97 equities remained unchanged, lower than 100 equities recorded in the previous week.