Nigeria’s equities market opened the week on a bearish path as the Central Bank of Nigeria’s (CBN) decision to suspend dividend payouts, executive bonuses, and foreign investments by select banks continues to ripple through the financial sector, wiping off N108 billion from the market capitalisation in a single trading day.
The All-Share Index (ASI) dropped by 170.77 points or 0.15%, settling at 115,258.77, while total market capitalisation fell to N72.68 trillion. The downturn was primarily driven by selloffs in large and mid-cap stocks, notably Zenith Bank, United Bank for Africa (UBA), Oando, Conoil, and Northern Nigeria Flour Mills (NNFM).
Investor sentiment remains fragile as uncertainty looms over the banking sector following the CBN’s regulatory clampdown aimed at preserving the financial health of institutions under its forbearance regime. The move affects seven banks with combined obligations totaling $4.01 billion, according to Renaissance Capital Africa. The CBN directive mandates these banks to pause shareholder rewards and capital expansion until their capital adequacy positions are fully verified.
Market analysts predict a continuation of the bearish trend in the short term. Afrinvest Limited noted that investor attention has shifted to the Central Bank’s Treasury Bills auction, where expectations of stable yields may suppress equity market enthusiasm. Similarly, Vetiva Dealings and Brokerage described the current market phase as “price discovery,” acknowledging the potential for more downward movement while maintaining that investor activity remains healthy and institutionally driven.
Despite the overall negative outlook, a few stocks managed to post gains. Guinea Insurance led the gainers with a 10% rise, closing at 77 kobo, while Ellah Lakes, Legend Internet, May & Baker Nigeria, and Fidson Healthcare all recorded gains above 9%. However, the losers outnumbered the gainers significantly, with 45 stocks closing in the red against 19 that advanced.
Top losers included NNFM, which dropped by 10%, and C&I Leasing, which fell by 9.68%. University Press, FCMB Group, and Learn Africa also suffered significant losses.
Trading activity slowed, with total volume declining by 22.7% to 721.75 million units valued at N22.01 billion across 22,100 deals. Access Holdings led the volume chart with 92.7 million shares worth N1.91 billion. UBA and Zenith Bank followed closely with substantial trading volumes, reflecting continued investor interest in the banking sector despite regulatory headwinds.
The CBN’s forbearance directive underscores a shift toward long-term financial stability over short-term shareholder gratification. While this may bolster the banking sector’s resilience, the immediate impact on market sentiment and capitalisation remains a pressing concern for investors navigating a climate of regulatory uncertainty.
