Nigeria's banking stocks are experiencing a surge, reaching a six-year high, as investors celebrate the Central Bank of Nigeria's decision to liberalize foreign exchange (FX) regulations. Key banking stocks such as Access Corporation (+79.4%), FBN Holdings (+55%), GTCO (+42.2%), Fidelity Bank (+60%), Sterling Bank (+99.3%), UBA (+53.9%), and Unity Bank (+80%) have become a source of delight for investors.
Lagos-based analysts at Coronation Research have advised investors to consider the implications of Naira exchange rate liberalisation, drawing lessons from the last convergence of the official foreign exchange rate and the parallel market rate in 2017. They believe that bank stocks, as well as the overall stock market, stand to benefit from this development.
Several other banking stocks have witnessed increased investor interest. Stanbic IBTC Holdings has gained 54.9% this year, while Zenith Bank (+35.4%), ETI (+43.4%), FCMB Group (+30.4%), and Wema Bank (+27.9%) have also seen notable growth.
Nigeria's equities market maintained its positive trajectory on Monday, with a 0.22% increase, reflecting the prevailing optimistic sentiment. In June alone, the market has risen by 6.40%, bringing the year-to-date (YtD) positive return to 15.78%.
The Nigerian Exchange Limited (NGX) All-Share Index and the equities Market Capitalisation, which stood at 59,206.63 points and N32.237 trillion respectively as of Friday, have now reached 59,338.76 points and N59.338 trillion.
Futureview research analysts, in their stock recommendation for June 26, expressed optimism about the market due to attractive discount opportunities, while noting that distractions could arise from the appealing yields in the fixed-income space and potential profit-taking by investors.
Vetiva research analysts, based in Lagos, expect the positive momentum in the local bourse to continue despite a decline in market turnover (-32.74% week-on-week) and volume traded (-21.74% week-on-week) observed last week.
Meristem research analysts shared a similar outlook, emphasizing the potential for profit-taking on stocks that have experienced significant appreciation in recent weeks. Overall, they remain optimistic for the week, with a positive sentiment prevailing unless there are substantial sell-offs in large-cap stocks that could potentially influence the market in the opposite direction.
