Banking shares plunge 8.5% over forex policy

Nigeria’s banking share in­dex plunged 8.5 per cent on Wednesday, as inves­tors expressed concern over lack of detail in the Central Bank of Ni­geria (CBN) new currency policy.

 

The main share index fell 2.7 per cent to 26,925 points by 1100, de­clining for a second-day, dragged down mostly by a sell-off in bank­ing stocks. The All Share Index closed down 4.26 per cent, its big­gest daily drop in 16 months.

The central bank said last week that it would introduce a flexible currency regime and abandon its 15 month Naira peg to the dollar, a policy U-turn designed to boost exports, local manufacturing and stave off a recession.

 

The bank has yet to clarify how the new policy would work, spook­ing foreign investors, long worried about getting caught in the middle of a currency devaluation.

 

The index was dragged down by Zenith Bank and Guaranty Trust Bank, which fell 9.68 per cent each, Diamond Bank dropped 9.38 per cent and First City Group fell 9.36 per cent.

 

Other decliners include Access Bank down 8.47 per cent, Fidelity Bank, 6.77 per cent, FBN Holdings down 5.06 per cent and Ecobank Transnational Inc. 4.72 per cent.

 

However, activities on the NSE on Tuesday resumed on a bear­ish note after the public holiday with market capitalisation which opened for the week at N9.928 tril­lion losing N428 billion or 4.3 per cent to close at N9.500 trillion.

 

Also, the All-Share Index dropped 1,239.09 points or 4.3 per cent to close at 27,663.16 compared with 28,902.25 achievedon Friday.

 

Market analysts attributed the development to profit taking em­barked upon by fund managers to balance their accounts for May.

A breakdown of the price move­ment chart indicated that major blue chips recorded price depre­ciation with Forte Oil leading the pack, dropping by N10.31 to close at N195.90 per share.

Dangote Cement came sec­ond with a loss of N8.12 to close at N167.01 while the Nigerian Brew­eries lost 70k to close at N135 per share.

Lafarge Africa declined by N6.44 to close at N76.57 and Guinness shed N5.49 to close at N104.32 per share. Conversely, Glaxosmith­kline led the gainers’ table with 50k to close at N21 per share.

Etranzact followed with a gain of 45k to close at N5.46 while UPL increased by 22k to close at N4.64 per share. Trans Express Nation­wide also improved by 14k to close at N1.66 and Continental Reinsur­ance added 5k to close at N1.15 per share.

Fidelity Bank recorded the highest volume of activities, trad­ing 75.11 million shares worth N99.89 million. The FBN Hold­ings followed with an exchange of 70.01 million shares valued at N277.63 million while Access Bank traded 24.32 million shares worth N137.94 million.

Ecobank Transnational Incor­porated sold 22.98 million shares valued at N376.74 million and Transcorp exchanged 17.77 mil­lion shares worth N23.31 million.