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Bank Recapitalization Spurs Stock Market Retreat, Investors Lose N633 Billion

! Proposed Banking Recapitalization Leads to Significant Stock Market Decline, with Investors Losing N633 Billion

Investors have been retreating from the Nigerian stock market, particularly the banking sector, following the Central Bank of Nigeria’s (CBN) recent recapitalization announcement. This shift in sentiment led to a significant N633 billion drop in value.

By the end of last week, which was shortened by holidays, the total market capitalization of all listed equities had decreased to N57.87 trillion from N58.498 trillion, a 1.1% decline.

Additionally, the Nigerian Exchange Limited’s (NGX) All Share Index (ASI) fell by 1.1% to 102,314.56 basis points, down from 103,437.67 basis points. Notable declines were seen in major banking stocks, including Guaranty Trust Company (GTCo) Plc, which dropped by 13.75%, FBN Holdings Plc by 11.15%, and Zenith Bank Plc by 5.88%.

The market’s Month-to-Date (MtD) and Year-to-Date (YtD) returns also saw reductions to -2.1% and +36.8%, respectively.

Trading volumes and values also saw a downturn due to the shorter trading week, with a 69.2% week-on-week decrease in volume and a 50.5% fall in value, closing at 734 million units and N31.58 billion respectively.

All major sector indices finished lower, with the banking sector experiencing the sharpest decline at 7.2%. This was followed by the insurance sector, which fell by 2.4%; consumer goods by 1.3%; oil and gas by 0.3%; and industrial goods by 0.2%.

Market analysts from Cordros Capital predict continued negative sentiment in response to concerns over potential dilution effects from the CBN’s recapitalization plan. “In the medium term, we foresee that the macroeconomic environment and corporate actions will shape investor sentiment,” they noted.

Conversely, analysts at Parthian Securities expect mixed market performance in the upcoming week, suggesting that investor sentiment may vary during the next trading sessions.

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