.Stockbrokers blame unfriendly policies, uptick in fixed market yieldHead, Equity, Planet Capital, Dr Paul Uzum said although the banking sector remained the liquid segment of the market where people keep the bulk of their investment, FPIs who invested in equities (mainly banks) when the exchange rate was N1,600, have stopped buying while other FPIs, who were trapped in Nigeria are selling to cash out of Nigeria given the improvement in exchange rate.
“The rise in interest rate is affecting the market as people are selling stocks to place in Treasury bills and commercial papers. Secondly, banks like GTCO disappointed in their dividend payment; dividend fell, making investors sell the stock,” he added.
Vice President of Highcap Securities, David Adonri, said the negative YTD return on the banking sector index is surprising because the fundamentals of banks grew astronomically from the third quarter of last year due to the forex windfall they enjoyed from floating of the Naira.
“However, the enthusiasm by investors became dampened when market unfriendly requirements for banking recapitalisation exercise were rolled out by CBN.
“Salt was added to this injury when the CBN again restrained banks from paying out huge dividends commensurate with their earnings which several investors were targeting when they rushed to the sector.
“Market correction is now taking place to align the prices of bank stocks to their dividend yield. After mark down, stability is expected to prevail in the sector.”
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