Equities market suffers first-week loss over hike in CRR

Temitope Adebayo

The Nigerian Stock Exchange (NSE) equities market segment suffered its first weekly loss of 2020 as the impact of the Central Bank of Nigeria’s(CBN) hike in the Cash Reserve Ratio (CRR) spike investors selloffs in listed banks shares.

The Monetary Policy Committee (MPC) of the apex bank had voted last week to increase CRR to 27.5 per cent from 22.5 per cent following an increase in the inflation rate.

Investors reacted with NSE banking index dropping by 5.2 per cent or 20.36 basis points week-on-week (WoW) performance to 373.79basis points from 394.15basis points, it opened for trading last week.

Our correspondent gathered that the decline in banking index last week is the second-largest decline since the week ended August 9, 2019 (-6.1 per cent).

Subsequently, the All-Share Index plummeted by 2.7per cent – largest weekly loss since the week ended April 5, 2019 (-4.6per cent) – bringing the Year-till-Date (YtD) return to +7.5per cent.

Our correspondent gathered that FBN Holdings lead other financial institutions in terms of investors’ profit-taking, followed by Stanbic IBTC Holdings.

The share price of FBN Holdings dropped by 10.27 per cent or N0.75 to N6.55 from N7.30 while the share price of Stanbic IBTC Holdings depreciated by 10 per cent or N4.25 to N38.25 from N42.50 it opened for trading last week.

Also, the share price of Zenith bank plc losses N1.10 to close at N20.65 from N21.95 while United Bank of Nigeria (UBA) recorded N0.55 decline in share price to N8.00 from N8.55 per share. Access bank also dropped by N0.35 in share price to N9.90 from N10.25.

In addition, the share price of Guaranty Trust Bank plc (GTBank) dropped by N2.10 to N30.00 from N32.10 as Union Bank of Nigeria plc reported N0.30 decline in share price to N5.90 from N6.20 the equities market opened for trading last week.

Analysing by other sectors showed that the Industrial Goods (-2.8per cent), and Oil & Gas (-1.1per cent) indices following suit. Conversely, the Insurance (+0.9per cent) and Industrial Goods (+0.1%) indices were the only indices to post positive performances.

Analysts at Cordros capital said, “In our view, the trend witnessed this week is likely to persist, as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market return.

“Nonetheless, we advise investors to focus on taking positions in fundamentally justified stocks.”