Herbert Wigwe, GMD, Access Bank

…stocks’ losses decline on market rally

Equity share price of some major banks on the stock exchange received a major boost with market rally in November. Experts had expressed concern over the price of some these stocks which have been trading below par although the banks are performing exceptionally well even in a distressed economy.

Access Bank stock seems to be the biggest beneficiary of the recent price gains, as it is doing superbly well at the moment. This stock has gained 61.54% year to date. Some equity analysts said that big banks recorded increases in share price which have reduced their individual year to date price losses. Meanwhile, market capitalisation of the Tier I banks hit N2.342 trillion on Friday.

Guaranty Trust Bank remains the pricey stock among the big banks, followed by Zenith. Access Bank continues its positive momentum, while others banks in Tier-I category have reduced their year to date losses with November gains.

This terminal bullish strand was driven by CBN ban on banks from investing directly on Treasury Bills, and this November gains across banking index has helped to reduce year to date negative return as market soak up new information. Chart readings showed that the trend has been largely positive with big banks recording price increase in the recent sectorial concentrated bullish run.

In the last seven trading sessions on the bourse, there was apparent shift in sentiments to some banking stocks. The focus has been on specially the big banks that account for significant size of the market and priced high due to ease of trading their stocks. Others in Tier-II did achieve some pushes also.

Market observers said the ban on individuals from buying directly from open market operations instruments, which some platforms mistake for Treasury-Bills provided the impetus for the capital market. Equity market was on the receiving end with increased buying interests, as yield on fixed instrument – Treasury Bills – weakened.

Investment experts told BusinessHallmark that the on-going rally around these banks stock is not a flash in the pan. Investors are excited to see prices of their stocks growing and hoping the trend would stay.

“This makes investing better when dividend paying stocks respond in line with their individual performance fundamentals”, an investor told Business Hallmark.

However, some analysts added that the market is reacting to earnings per share surprises in the third quarter earnings season, new information and perhaps analysts’ revision of EPS for the fourth quarter.

Access bank, Zenith, Guaranty Trust Bank, FBNH and of course UBA benefitted from the market rallies as uptick price performance in just 15 tradings days reduced year to date losses. Instead of turning positive returns, other than Access Bank that is in green, other Tier I are closing year to date losses.

Month to date, BusinessHallmark observed that stock market has taken some kind of earnings information and market surprises in banking stock. There is a consensus among market analysts that there is general positive sentiment around banking stocks and they expect this to drive the market.

On the other hands, these analysts observed specific sentiments rallying around Access Bank stock in particular. For the bank, the trend line has continued to swing up, as Access Bank share price maintains such trajectory that has not been seen in the past.

At market capitalisation of N373.224 billion, Access Bank rose from year low at N5.3, doubling up as it closed the trading session last week to N10.50. Tracking the stock market chart, analysts observed that Tier-I banks are doing just fine, but Access Bank stock is doing superbly well at the moment. This stock has gained 61.54% year to date.

The stock that has been breaking bars surged by more than 30% month to date, after both earnings release. Guaranty Bank Plc traded at N29 on Friday, as the bank’s market cap pitched at N853.504 billion. The recent rally has reduced year to date loss to 15.94%. At the beginning of the year, GTBank stock was N34.45. It had dropped to N24.90 in the year.

United Bank for Africa gain has helped reduce its year to date loss to 5.13%. The stock closed trading session on Friday at N7.40, having peaked at N8.20 in the year. The lowest price it had traded was N5.50. Market values UBA at N253.075 billion.

At market cap of N245.882 billion on 35,895,292,792 shares outstanding, FBNH year to date loss was reduced to 14.38% as the share traded at N6.85 on Friday. It had peaked at N8.45 in the year before it dropped low to N4.50, though the share opened at N7.95. In November 7th. FBNH stock hit the bottom in the week at N5.40

To investors Zenith Bank is worth N591.823 billion as they traded the share at N18.85 on Friday, thereby reducing its year to date loss to 18.22%. On November 7th, the stock traded at N17, but closed at N18.85 on Friday, having peaked at N26 in the year before it dropped low to N16.20. It had opened floor at the beginning of the year at N23.05.