The Nigerian stock market closed on a negative note on Thursday as investors lost ₦1.92 trillion following sell-offs in banking and cement stocks
This decline was triggered by reactions to new regulatory guidelines issued by the Central Bank of Nigeria (CBN) on foreign subsidiaries of banks.
Market capitalisation fell from ₦155.780 trillion to ₦153.858 trillion, representing a 1.23 per cent or ₦1.922 trillion decline.
The All-Share Index (ASI) also dropped by 1.23 per cent or 2,994.90 points to close at 239,734.61, down from 242,729.51.
The Year-to-Date (YTD) return moderated to 54.82 per cent.
Investment banker and stockbroker, Mr Tajudeen Olayinka, attributed the decline to investors’ reaction to the new CBN directive, which limits banks’ investments in foreign subsidiaries to 10 per cent of their equity capital or shareholders’ funds.
Olayinka explained that banks operating above this threshold have been directed to begin divestment from such subsidiaries.
“The drop in the ASI and market capitalisation stemmed from the CBN guideline that compels banks to limit investments in foreign subsidiaries to 10 per cent of their equity capital. The market interpreted this as the CBN integrating revenues and reserves of foreign subsidiaries into regulatory capital, which could limit corporate payouts or make future dividends dependent on growth,” he said.
He noted that the directive triggered heavy repricing of international banking stocks, which spilled over to other large-cap equities, particularly cement companies.
Olayinka, however, described the sell-off as temporary, stating that the affected banks remain fundamentally strong, well-capitalised, and undervalued.
“The upside potential for these banks is very high. Anyone selling off banking stocks at this time may be throwing away good money. The industry is now very strong and highly regulated,” he added.
Market breadth closed positive with 42 gainers against 30 losers.
CAP and FTN Cocoa Processors led the gainers, up 9.99 per cent each, closing at ₦212.50 and ₦8.04 per share respectively.
On the losers’ side, University Press led with a 10 per cent decline to close at ₦4.50. Other notable losers include Berger Paints, Zichis Agro Allied Industries, and Meyer, which all shed 9.97 per cent.
Trading activity improved as total volume rose by 29.34 per cent to 1.83 billion shares valued at ₦72.17 billion, exchanged in 81,131 deals.
NEM Insurance led in volume with 360.56 million shares, while Seplat Energy topped the value chart with ₦12.98 billion.
