By Udeme Ekwere

Investors’ rush for low-priced bank stocks have improved activities on the Nigerian Stock Exchange significantly.

Activities began to improve on Wednesday as major indicators closed positive, following 10 straight days of losses.

Equity trading activities had recorded their longest loss since August 2009 with the market capitalisation of the listed equities shedding over N800bn in about two months.

From a height of 27,797.39 basis points on January 25, 2011, the NSE’s All-Share Index lost 9.4 per cent or 2623.15 basis points to close on Tuesday at 25,174.24 points.

The market capitalisation of listed equities also dropped by N842bn or 9.5 per cent from N8.885tn to N8.043tn in the same period.

However, the NSE Index and the market capitalisation rose to 25,585.24 and N8.174tn respectively.

According to the analysts, most of the banking stocks have reached or are approaching their year-low, and this therefore presents a huge ‘buy’ opportunity for investors.

In their report for the week ended March 11, 2011, researchers at Vetiva Capital Management Limited noted that the rally in activities, which began last Wednesday might continue as a result of the cheap prices of most good stocks, especially those in the banking sub-sector.

The report said, “On the back of the cheap pricing of most stocks following the losses of the previous two weeks, we hope to see a continuation of the rally, which began midweek. We believe that the results for the financial year earnings may start rolling in soon.

“This coupled with the relative low pricing of the banking stocks should buoy investors’ interest in the market in the week ahead.”

For instance, Intercontinental Bank Plc which was worth N2.87 exactly a month ago fell by 44 per cent to N1.60 per share. Afribank Plc, Unity Bank Plc and Oceanic Bank International Plc lost 31 per cent, 17 per cent and 34 per cent from their prices a month ago.

The President, Association of Stockbroking Houses of Nigeria, Mr. Rasheed Yusuff, said that activities in the market would soon stabilise with the expected release of the banking results.

According to him, presently, most stocks in the market, especially those in the banking sub-sector, are undervalued, following huge declines recorded in the past few weeks.

“The problem in the market is that there has been low liquidity for various reasons. But we know that once the banking results are released, activities will improve significantly in the market,” he stated.

 

Source: Punch