Breaking News on Banks Recapitalization: Following the March 2024 directive from CBN for commercial banks operating in Nigeria to raise their capital base to a minimum of N500 billion, the commercial banks have been scrambling through various means to draw in more investments funds through Public Offers (PO) and Rights Issue (RI). This exercise has seen the sales of stocks in Nigeria’s Capital Markets rise by 44% so far.
9AM News Nigeria observed that these stocks sold are mainly from banks and bank affiliated companies.
Commenting on this trend, a Lagos based Comercio partners research analyst said in their Macroeconomi and Markets Outlook “The banking sector stole the show, grappling with its recapitalisation saga, which drove much of the market’s ups and downs. There would be more activities in the equity space, as banks given the ongoing recapitalisation would raise more capital to meet the benchmark”
Banks On Recapitalization
Some banks such as Access Bank, Guaranteed Trust Bank and Fidelity bank have concluded their recapitalization exercise having raised the N500 billion sought while other banks like Zenith Bank and FCMB are still out in the fields selling their shares to raise capital.
A Coronation research analyst speaking on the matter said “The exercise would potentially lead to the influx of capital into the domestic economy through offshore capital-raising activities and strengthen the capacity of lenders to support credit creation in the real sector as stronger and more resilient banking entities emerge post-recapitalisation. On the other hand, the exercise would dilute returns for existing shareholders of the banks, could encourage risky behaviour in a bid to raise the required capital. Furthermore, the recapitalisation exercise could lead to the concentration of market power for a few banks”.
A Meristem research fellow explaining the trend in their 2024 H1 report said “The Nigerian stock market began the year strong, with significant gains in January, but the momentum reversed in the following months as the CBN’s hawkish stance and disappointing corporate earnings eroded investor confidence, leading to a largely bearish first half”.
“For the remainder of the year, we anticipate a continuation of sideways trading activities in the equities market. Nevertheless, we predict an overall positive outlook for the Nigerian equities market in 2024 as corporate actions and performances and enhanced liquidity in the foreign exchange market boost investor sentiment, impact activity levels and drive growth in the local bourse” he added.
Nigerian Capital Markets Stock Deals
According to another report made available to 9AM News Nigeria from the domestic and foreign portfolio investment (FPI), stock deals in the Nigerian Capital Markets has reached nearly N3.0 trillion in volume in 2024, almost doubling from N1.9 trillion within the same frame of time in 2023.
In another report titled ‘H2 2024 Outlook’ made available to Ogasabi of 9AM News Nigeria, United Capital Analysts said “After breaking through the historic resistance of 66,121.93 points, the NGX-ASI remains poised for greater heights in 2024, riding on the improved economic outlook for the Nigerian economy, and resilient financial performance of listed corporates. In H2-2024, we expect a blend of the expected high base effect in Q3-2024, the potential moderation of interest rates, corporate actions, monetary policy ease in advanced economies to motivate bullish strides at different intervals. The liquidity of the financial system will also play a positive role”.
