Home Analysis Investors may be 'dumping' FUGAZ stocks to buy MTN shares

Investors may be ‘dumping’ FUGAZ stocks to buy MTN shares

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On May 16th the Nigerian Stock Exchange welcomed a big elephant into the bourse. MTN with a market cap of about N1.8 trillion was expected to inject positive activity and attention for the stock market badly in need of one.

Three days later and it is doing the exact opposite. Investors are frustrated because they cannot lay their hands on the stock and stockbrokers are reeling because buy or sell losing a huge opportunity to earn some fees. Of all the people seething from the MTN listing, another group and perhaps the former king of the blocks may have a lot more to complain about.

FUGAZ Performance since MTN Listing
Date FBNH UBA GT Bank Access Zenith
May 20th 2019 7.0 6.0 30.4 6.1 19.7
May 17th 2019 7.0 6.0 30.6 6.5 19.6
May 16th 2019 7.0 6.0 31.0 6.5 19.6
May 15th 2019 7.3 6.0 31.6 6.8 20.0
May 14th 2019 7.3 6.2 31.6 6.8 20.0
May 13th 2019 7.5 6.0 31.0 6.7 19.7
May 10th 2019 7.3 6.5 32.0 7.1 20.0

 

FUGAZ get toasted: Nigeria’s top 5 banks, FBN, UBA, GT Bank, Access Bank, and Zenith Bank have collected borne the brunch of MTN’s listing. Since the 16th, all 5 stocks have either lost or stayed relatively flat. Investors are not just interested in paying a sizeable premium for the stocks not with MTN in town. Some market analysts believe investors are offloading their positions to get liquidity to invest in MTN. Though there is no evidence to support this, the reasoning is not far fetched.

Optics: MTN listing was supposed to be a blessing for the Nigerian Stock Market. The government essentially forced the company to list hoping this will be a form of booster for a dying market and more importantly have Nigerians share in a part of the cookie jar called MTN profits. As it seems, that is not happening and investors view the whole listing in a negative light. The more investors get irritated and frustrated about not being able to buy these shares the dire the outlook for the stock exchange will be for everyone. Already, social media is agog with people pouring out their frustration with claims that the stock market still can’t be trusted.

What next FUGAZ: FUGAZ are trading at PE ratios of about 4x on the average compared to MTN’s 12x. Its market value may continue to fall in the next coming weeks as investors get more wary about a market they’ve come to loathe. Banks and the wider stock exchange may have to look towards the earnings season for another glimmer of a bounce. For now, they’ll have to be bear (no pun intended) their bearish situation for some more days if not weeks.

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