Sell pressure witnessed on shares of the top two Nigerian banks in market capitalisation Zenith Bank Plc and GTCO Plc since the beginning of the year has resulted in investors of both banks losing about N247.623 billion at the close of trading on 22nd June.
Checks by Nairametrics showed that GTCO Plc dropped by 19.23% to N21.00 per share N26.00 which was the opening share price in January, while Zenith Bank Plc shed 12.72% to N21.95 per share from share price of N25.15 at the commencement of the current year trading in January.
This is despite the fact that the banking sector witnessed an improved performance in Q1’2022 on various parameters like credit growth, asset quality, and profitability.
The relentless sale pressure by Foreign Portfolio Investors (FPIs) is on the back of high commodity inflation that happened due to the Russian-Ukraine War, which led to a spike in interest rates and, in turn, led to a jump in bond yields in the US and other developed markets.
Foreign institutional investors invest in Nigeria stocks or other emerging markets when they have excess liquidity (low borrowing costs). However, if bond yields rise in the US, money will move away from emerging markets.
Following low sentiment from FPIs analysis from the NGX has shown that foreign transactions stood at N201.29 billion, accounting for about 13.37 per cent of the total transactions carried out from January to May, while domestic transactions constituted N1.304 trillion, representing 86.63 per cent of the total transaction, outperforming the foreign investment during the same period.
Performance of the banks’ share prices
- GTCO closed its last trading day (Wednesday, June 22, 2022) at N21.00 per share and N689.153 billion in market capitalisation on the Nigerian Stock Exchange (NGX) as against N26 per share and N765.210 billion in market capitalisation at the beginning of trading in January 2022, hence has earned a loss of N147.155 billion or 19.23% year to date.
- Zenith Bank Plc also closed its last trading day (Wednesday, June 22, 2022) at N21.95 per share and N689.153 billion in market capitalisation on the Nigerian Stock Exchange (NGX) in contrast to opening figure of N25.15 per share and N789.621 billion in market capitalisation at the beginning of the year on January. The bank has since lost 12.72% and N100.467 billion in market capitalisation.