GTCO, Prestige Sink Banking, Insurance Indices In NGX H1 Performance

The banking and insurance sub-sectors ended in the red zone in the first half of this year, dampening the remarkable performance that earned the Nigerian stock market applause.

The record shows that the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and market capitalisation appreciated by 21.31 per cent and 25.29 per cent to 51,817.59 basis points and N27.94 trillion on June 30 respectively, from 42,716.44 basis points and N22.296 trillion it opened on January 4.

The impressive performance recorded by NGX saw investors gaining an estimated N5.64 trillion in H1, amid uncertainties in the Nigerian political circle, the Russian-Ukraine war and rising global inflationary pressure.

However, sectoral performance shows that the banking index depreciated by 2.04 per cent to 397.79 basis points jointly with the insurance index which also dipped 9.98 per cent to 178.33 basis points in the review period.

Analysis by insidebusiness.ng shows that Access Holdings, Guaranty Trust Holding Company, Stanbic IBTC Holdings, United Bank for Africa, Unity Bank and Zenith Bank were the stocks that dragged the banking index to negative performance.

GTCO suffered the highest drop as the company’s share price fell from N5.5 to N20.5, representing a 21.15 per cent loss to shareholders. Unity Bank followed, declining by 16.67 per cent or 0.09k to 0.45k.

The share prices of Zenith Bank fell by 13.72 per cent or N3.45 to N21.7; UBA dropped by 7.45 per cent or 0.6k to N7.45; Stanbic IBTC decreased by N2.45 or 6.81 per cent to N33.55, and Access Bank lost 0.05k or 0.54 per cent to N9.25.

In the insurance sector, Prestige Assurance Company led the pack shedding 0.14k or 27.45 per cent to N0.37; Coronation Insurance dropped 0.15k or 26.79 per cent to 0.41k and NEM Insurance lost 0.7k or 15.56 per cent to N3.8.

Other insurance stocks in the drop zone were Axa Mansard Insurance, which shares price fell by 13.79 per cent or 0.32k to N2; Sovereign Trust Insurance dipped 10.00 per cent or 0.03k to 0.27k; AIICO Insurance declined by 8.57 per cent or 0.06k to 0.64k; Consolidated Hallmark Insurance fell by 7.59 per cent or 0.06k to 0.73k, and Lasaco Assurance dropped by 1.90 per cent or 0.02k to N1.03.

Patrick Ezeagu, an analyst at Solid Rock Securities and Chairman, ASHON, said hope drove investors’ sentiment owing to uncertainties in that period. Trading on the stock market is now driven by hope for a better tomorrow owing to the state of the economy and the political uncertainties in the country.

“The point is that towards an election year like this (forthcoming 2023 general elections), nothing is certain. You have three major candidates running for the presidency and political parties trying to take over the government in the election, there is certainly going to be regime change whether the same party changes to another person or another party comes on board.

“There is uncertainty in the air and uncertainty is the enemy of stability. So you can see that stocks are just behaving true to type and that is why the market is called the barometer for the economy. And the economy is equally behaving yoyo with all the problems in the country which the market is also mirrored by.

“So when you have such uncertainty, there will be a lack of confidence and this reflects the mood of the market. But what will happen is that people are going to be believing in hope because that is what human beings believe in, believing in hope that things are going to be better,” Ezeagu said.

He also said, “Hope and the level of expectation on the environment will make people who make extra money come to the market. Even though the market is yoyo, there are more gains than losses. So if you plot the graph, you can see that there is a steady climb, with a few drops here and there. Except something extraordinary happens during the election that hope would be carried along through to next year.

“I am telling you that people believe that things will get better because no regime would be worse than the current administration even if a new one comes in 2023. So people will be making decisions based on the expected hope with the new regime expected next year. And this is what has sustained the market in recent times with a positive nature, although there are a few drops once in a while. On average, the market is looking upwards and this will also reflect on the bottom line of companies.

“Since inflation has come in, even if you don’t produce more than you have produced before, using the same baseline in your production line, because of inflation, the numbers are going to be higher and the same thing will happen to cost as well. Overall, there will be some margin and the margin will be higher than usual. And once companies start coming up with their results, the natural thing is that the Capital market will continue to be relied upon and people will have confidence in the market.”

In looking at how the equities market may perform in the second half of the year, an analyst at Highcap Securities Limited, David Adonri, said the over 20 per cent growth recorded during H1 should not be anticipated, asserting that at best, stocks will rally at less than 10 per cent growth.

He said, “I understand that the first half performance of equities is majesty number one in Africa. This was hugely impacted by the full year results and the first quarter results of companies which were impressive. And the market has already reached those activities.

“Moving into the second half, the recent interest rate joke by the Central Bank of Nigeria (CBN) will adversely affect financial assets and more financial assets will migrate to equities as a result of the interest rate hike. And of course, you know inflation is still growing higher and that may affect a whole lot of things. We are not expecting a repeat of the 21 per cent growth seen in the first half in the second half. However, a cute outlook for this half indicates a growth of around less than 10 per cent in the second half of the year.”