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Trading trends
indicate that investors in the Nigerian stock market are showing more
interest in some bank shares in spite of the crisis in the sector.

Analysis of
transactions in the banking subsector of listed equities show that the
shares of some trouble-free banks – UBA, Guaranty Trust, First Bank,
Fidelity; and a rescued bank – Finbank have continued to top as the
most traded stocks in the past five trading days.

Analyst says the
rationale behind investors’ interest in the banking stocks could be
attributed to government’s efforts to return the banking industry back
to profitability.

Gbenga Emmanuel, a
finance analyst at WealthZone Company, a portfolio management firm,
said, “What is happening presently in the market is more of the
activities of institutional investors and few individual investors
trying to take position in some banks.”

Mr Emmanuel said
banks are becoming attractive “not because they usually dominate
trading at the Stock Exchange but because of various efforts by the
government to ensure that banks continue to do business and give good
returns to their investors.”

Sinking fund

Meanwhile, Kingsley
Moghalu, Central Bank of Nigeria (CBN) Deputy Governor on Financial
System Stability, recently said banks and the CBN have come together to
establish a sinking fund to contribute to the revolution of the banking
industry.

“This is the first
in the world and it is phenomenal. Banks have voluntarily said they
will contribute 0.3 per cent of their assets over 10 years to resolve
the banking crisis, including banks that we could say were not part of
the problems,” Mr. Moghalu said, adding that “with the creation of the
sinking fund coupled with the Asset Management Corporation, we may
resolve in a unique outcome the financial crisis in Nigeria at very
little or no cost to tax payers.”

At the close of
Monday’s trading, the Exchange’s market capitalisation, which recorded
N184 billion losses in last week’s trading, gained over N42 billion or
0.69 per cent increase to close at N6.152 trillion from N6.110
trillion. The All-Share Index was up by 0.69 per cent to close at
25,156.46 basis points from 24,984.80, reflecting an increase of 171.66
units.

A total of 31
stocks appreciated in price on Monday, while 35 stocks depreciated.
First Bank, Finbank, and UBA were the most traded stocks yesterday,
followed by Guaranty Trust Bank and Aiico Insurance.

The banking
subsector led the most active subsector’s chart with 178 million
quantities of shares, valued at over N1.517 billion. The subsector’s
volume was largely boosted by shares listed in the most traded stocks
above.

Trading activities
in the insurance subsector followed, with 24 million shares valued at
N29.206 million. Volume in the subsector was driven by shares of Aiico
Insurance, Guaranty Trust Assurance, and Mutual Benefits Assurance.

The information and communication technology subsector was third on
Monday, with over 11 million shares valued at N6.437 million. Volume in
this subsector was largely boosted by shares of MTI Nigeria; followed
by Chams, Starcomms, and IHS Nigeria.