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Equities Market Extends Gains As Banking Stocks Rebound

February 26, 2014

High demand for equities of banks, following investors' anticipation of improved results from some of the banks for the 2013 year, assisted the Nigerian stock market to extend its bull run for the second day on Tuesday.

The market, which began the week on Monday with a growth of 1.1 per cent contrary to bearish expectations, recorded a higher growth on Tuesday rising by 1.17 per cent. The Nigerian Stock Exchange (NSE) All-Share Index rose 1.17 per cent from 38,707.14 to close at 39,160.10, while market capitalisation added N145 billion to close at N12.579 trillion.

However, the positive performance recorded on Tuesday was driven by the banking stocks spurred by high demand by investors,. For instance, Skye Bank Plc rose 10.1 per cent, FBN Holdings (9.7 per cent) and UBA (6.5 per cent). Guaranty Trust Bank Plc and Zenith Bank Plc rose 3.7 per cent and 3.4 per cent respectively.

The gains by the banking stocks lifted the NSE Banking Index by 4.1 per cent, while the NSE Insurance Index gained 1.8 per cent. NSE Insurance Index positive trend resulted from gains by International Energy Insurance Plc (5.0 per cent), Continental Reinsurance (4.8 per cent) and NEM Insurance (4.0 per cent).

In all, 42 stocks appreciated compared to 18 that depreciated. Unilever Nigeria Plc led the price losers with N2.40 to close at N45.60 followed by PZ Cussons Nigeria Plc with N1.12 to close at N38 per share.

Analysts at Meristem Securities Limited had expected banking stocks to remain depressed by the monetary tightening policy of the Central Bank of Nigeria and the recent suspension of the CBN Governor, Sanusi Lamido Sanusi.

However, they added that, current prices make the expected dividend yields on these banks ever more attractive at an average of 8.6 per cent, saying they believe that investors will reward banking stocks with impressive performance with positive sentiments.

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Source: AllAfrica

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