Investors in the Nigerian Stock Exchange are probably not looking forward to the end of the holiday. As markets open on Friday, analysts believe the stock market is set for a massive sell-off as the fear of the financial state of banks sends chills down the spine of investors.
On Monday, Skye Bank and the Central Bank announced that the management and board of the bank had agreed to “step- down” paving the way for a new board and management selected by the Central Bank. The question on everyone’s mind now is how bad is Skye Bank’s results? And more importantly, is this the only bank that is in trouble?
This question is pertinent when you consider the number of bad loan provisions made by commercial banks at the end of the 2015 Annual report. The impact these loans have on the capital adequacy ratios of some banks is quite worrisome especially as the country faces up to recession. Businesses are suffering under a 45% depreciation in the exchange rate, scarcity of forex, rising inflation and lover government and consumer spending.
Investors will be looking closely at results of companies in the Manufacturing, Oil ad Gas, Industrials and Consumer goods sector to see how they fare when their results start to trickle in next week. All eyes will also be on Macro-economic indices such as the inflation rate, jobs report all expected later in July.
The mood in the economy is scary to a lot of investors and could dovetail into a major sell-off from Friday. We suggest caution at this time as it is better to watch as events unfolds over the next few days.
Nigerian stocks fell by over 1% on Monday with over N100 billion lost.
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