Investors target low-priced stocks as market remains unstable

By Odunewu Segun

Following the continued decline in share prices at the Nigerian Stock Market, investors appeared to be showing preference for low-priced equities, otherwise known as penny stocks.

National Daily gathered from trading reports of the Nigerian Stock Exchange, low-priced stocks have dominated activities charts in recent period, in what market analysts regarded as a shift of emphasis from liquidity to potential for higher dividend yield and capital appreciation, The Nation reports.

In the last three weeks, three stocks, which trade around N1 were the most active. The trio of Sterling Bank PLC, FCMB Group PLC and Transnational Corporation of Nigeria accounted for 250.205 million shares worth N237.138 million in 3,654 deals, representing 28.6 per cent of the total equity turnover volume. Total turnover at the NSE last week stood at 873.838 million shares worth N8.024 billion in 15,944 deals.

In the previous week, the trio of FBN Holdings Plc, Access Bank PLC and FCMB Group PLC also accounted for 226.665 million shares worth N757.967 million in 1,879 deals, representing 33.4 per cent of the total equity turnover volume for the week.

FBN Holdings Plc, the holding company for First Bank of Nigeria and its previous subsidiaries, had grown its total balance sheet to N5.1 trillion by the third quarter of this year as the financial conglomerate pooled gross earnings of N417.3 billion within nine months.

Key extracts of the nine-month report showed that FBN Holdings retained its leading position as the largest bank in Nigeria, in terms of balance sheet position.

Also, Sterling Bank Plc rode on the back of increasingly better operating and credit management efficiency to build up the quality and profitability of its core banking business in the third quarter.

Key extracts of the interim report and accounts of Sterling Bank for the nine-month period ended September 30, this year showed considerable improvements in key underlying fundamentals of the bank as it continues to grow its main focus of retail banking.

Head, Financial Advisory Group, GTI Capital Limited, Mr Hassan Kehinde, said the trend showed that investors were taking earnings and dividend yields as major consideration in their portfolio allocation.

According to him, with the low share prices of several stocks, there is potential for good dividend yields by the end of this year notwithstanding the depressed bottom-line due to the tough operating environment.