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Stock Market

Zenith Bank escape bear claws amidst NSE banking sell-off

Zenith Bank’s successful recovery pushed it out of the bear claws that gripped the NSE banking.

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Global stocks sell-off persists as resurgence of COVID-19 frighten investors 

At the end of the trading section today, the NSE banking (NGNBNK10) saw a drop of (-0.42%) to settle at 336.46 index points. Zenith Bank closing bullish and five banks closing bearish, while neutral gains were posted by four banks.

Market sentiment measured below par as the trading section saw more losses than wins.

Zenith Bank was the top gainer on the NSE banking index with an increase of (+0.99%) and the price closed at N20.55. Technical analysis shows that Zenith Bank started its bullish trend after 10 a.m., recovering from the sell-off at the early hours of the trading section. Zenith Bank’s successful recovery pushed it out of the bear claws that gripped the NSE banking.

READ: Zenith Bank Plc announces death of its Director, Professor Oyewusi Ibidapo-Obe

Fidelity Bank topped the losers in the NSE banking index with a decrease of (-1.79%) to close at N2.19. Although Fidelity Bank showed bullish tendencies, it could not maintain momentum and finished below par. Guaranty Trust Bank was the second-worst performer in the NSE banking as it dropped (-1.75%) to close at N28.00. Guaranty Trust Bank traded as high as N28.70 but started trading bearish after 10 a.m.

Wema Bank also felt the weight of the bears by finishing the trading session with a loss of (-1.67%) to close at N0.59. Jaiz Bank dropped by (-1.47%) to close at N0.67 thereby making the fourth position on NSE banking top loser today.

Lastly, Union Bank (UBN) dropped (-0.99%) to settle at N5. UBN technical analysis shows consolidation before fall from previously ascertained N5.10.

Neutral gains were seen amongst four of the banks at the end of today’s trading section. Access Bank, Guaranty Trust Bank, Sterling Bank, and UBA all ended the trading section with (0.0%) gains, barely escaping the sell-off in NSE banking.

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Outlook

  • Bond yield is still having a major impact on market prices.
  • The anticipation of earning report may be linked to the sell-off as investors attempt to reposition the investment.
  • Recent news of EFCC ultimatum for bankers to declare assets may be seen as a catalyst for sell-off in this sector.

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Ubah,Jeremiah ifeanyi is a PhD candidate of Economics in Covenant university. He has held positions as the financial manager in Opera and is also a research ambassador in M&S research Hub. Ifeanyi is currently the financial market analyst for Nairametrics. Follow Ifeanyi on Twitter @ubahjc

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Market Views

What you need to know to start the week

Getting up to an eventful week ahead, these are the things you should know.

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Foreign investors demand for Nigerian stocks increases to N38.98 billion, Nigerians reveal why they pick their favourite banking stocks

Last week was interesting and we tracked some notable events in the economy and markets that would likely have an impact on your money this week.

Economic Indicators

The National Bureau of Statistics released its monthly inflation figures and it is pretty clear that inflation in Nigeria is going only one way — up. Inflation rate stands at 18.17% for the month of March, rising from 17.33% in February. Food inflation currently stands at 22.95%. The macro environment looks particularly gloomy for the average man with rising inflation eroding purchasing power.

What we find the most significant is how this will affect investors. With inflation heading towards 20%, it is going to be increasingly difficult for fund managers and investors to earn decent returns on their investments. A few weeks back,  it was stated that the CBN had no real concern with inflation because it was caused by other related factors. We believe it is the right time for the Central Bank to step in by raising interest rates and mopping the excess liquidity in the economy.

The Central Bank last week announced that it was including wheat and sugar on the foreign exchange restriction list. Recall that the CBN had listed 41 items placed on the FX restriction list in 2015, then added maize to the list in 2020.

With existing players like Dangote Sugar, the CBN believes that Nigeria has enough or should have enough capacity to meet local demand.

Fixed Income

Last week, The Debt Management Office (DMO) announced the offer of N150 billion bonds for subscription by auction in the month of April on behalf of the Federal Government. We reported two weeks ago that bond prices were falling as the yield was rising. As at April, 15th, the S&P FMDQ Nigerian Sovereign Bond Index was -22.07% YTD.

Nigerian investors can still capitalize on decent yields in the bond market. The total subscription received from investors for the bonds was N333.48bn comprising N65.25bn for 16.2884% FGN March 2027 bonds; N110.19bn for 12.5% FGN March 2035 bonds; and N158.04bn for 9.8% FGN July 2045 bonds.

Cryptocurrency and volatility

The cryptocurrency market had a bullish week till yesterday when sell-offs in the market ensured that coins like Ethereum dropped by about 21.46%. Olumide Adesina, a market analyst and cryptocurrency expert, called it a “bloody Sunday.” In a Twitter Spaces conversation with Ugodre Obi-Chukwu on Saturday, he discussed how the market was overheating and the bullish run was unsustainable. Despite the losses yesterday, there is still a lot of upside on cryptocurrencies and many experts remain bullish long-term.

For whoever is willing to invest in this asset class, the rule of thumb is to only invest money you can part with and do your research.

Other related news:

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FG lifts suspension of issuance of new sim cards

The FG lifted its ban on new sim cards for telco players last week. This had previously been halted by the Federal Ministry of Communications and Digital Economy last December. Without a doubt, this is good news for stakeholders in the industry as analysts had predicted that the ban would affect the growth of the sector.

From the government’s perspective, it begs the question,  what was the need to issue a ban on new sim cards in the first place?

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Cryptocurrency

Cryptocurrency: Experts task SEC to issue guidelines for trading

Regulators should emulate their foreign counterparts and come up with proper regulatory framework.

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unclaimed dividend, SEC restrains fintech company, Chaka from advertising or offering for sale shares

The Securities and Exchange Commission (SEC) has been tasked to introduce guideline framework for the trading operations of Cryptocurrency in Nigeria.

According to them, the responsibility for creating a framework for Cryptocurrency trading in Nigeria lies with SEC and not the Central Bank of Nigeria (CBN), as it is done in the United States of America and other developed nations.

These were the words of experts at the On The Money show on Twitter (Ugodre’s space), put together by Ugochukwu Obi-Chukwu, Founder of Nairametrics, on Saturday.

One of the speakers and an investment analyst, explained that CBN has done what is within its power and the buck lies with the SEC, whose responsibility is to create the required framework.

He said, “CBN has done its bit, SEC has more to do but both of them seems to be pointing fingers. CBN is saying it can’t go ahead without SEC and vice versa. I urge them to emulate their foreign counterparts and come up with a proper regulatory framework.

SEC should come up with an exchange on crypto like Coinbase. If you have an exchange to regulate it is easier to monitor crypto. SEC should lead and issue the guidelines for the crypto market.”

A financial market analyst, Olumide Adesina, explained that crypto players need to engage the regulators more, instead of launching offensives from the sidelines. He said, “Nigerians need to be aware of the growing risks of crypto scams which cannot be eradicated without a strong input from SEC.

Crypto players need to lobby the regulators rather than going offensive, knowing fully well the clear mandate of SEC is protecting the Nigerian capital market.”

About Nairametrics: Nairametrics is a leading Nigerian financial resource company that offers services ranging from business news coverage, corporate analysis, macroeconomics data sourcing /analysis, and more.

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