Top Banks lose as investors’ eyes MTN shares

Nigeria’s top 5 banks, FBN, UBA, GT Bank, Access Bank, and Zenith Bank have collectively borne the brunch of MTN’s listing. Since the 16th, all 5 stocks have either lost or stayed relatively flat.

Recall that On May 16th the Nigerian Stock Exchange welcomed a big elephant into the bourse. MTN with a market cap of about N1.8 trillion, and was expected to inject positive activity and attention for the stock market badly in need of one.

The top banks are now trading at PE ratios of about 4x on the average compared to MTN’s 12x. Its market value may continue to fall in the next coming weeks as investors get more wary about a market they’ve come to loathe.

Banks and the wider stock exchange may have to look towards the earnings season for another glimmer of a bounce. For now, they’ll have to be bear (no pun intended) their bearish situation for some more days if not weeks.

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Meanwhile, investors are frustrated because they cannot lay their hands on the stock and stockbrokers are reeling because buy or sell losing a huge opportunity to earn some fees.

Of all the people seething from the MTN listing, another group and perhaps the former king of the blocks may have a lot more to complain about.

Investors are not just interested in paying a sizeable premium for the stocks not with MTN in town. Some market analysts believe investors are offloading their positions to get liquidity to invest in MTN.

Though there is no evidence to support this, the reasoning is not far-fetched.

MTN listing was supposed to be a blessing for the Nigerian Stock Market. The government essentially forced the company to list hoping this will be a form of booster for a dying market and more importantly have Nigerians share in a part of the cookie jar called MTN profits.

As it seems, that is not happening and investors view the whole listing in a negative light. The more investors get irritated and frustrated about not being able to buy these shares the dire the outlook for the stock exchange will be for everyone.

Meanwhile, the Nigerian Stock Exchange has addressed growing frustrations from retail and portfolio investors about their inability to lay their hands on MTN shares.

Investors across the country, eager to own shares in arguably the most profitable company in the country are reeling as they see the stock gain a whopping 30% in just three days of trading.

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The NSE in a press release on Monday insists that there is nothing it can do as MTN has not contravened any of its listing rules and cannot compel the company to offer new shares for subscription.

The exchange basically acknowledges that despite the fact that MTN’s trades have been over N12.2 billion most of the deals are between clients of the same stockbroking outfit.

Basically, the buyer and seller of the shares all reside with the same stockbroker. In this case, the buyer and seller could be related parties. This also means clients in other stockbroking outfits don’t even stand a chance to bid for their own clients shutting them out of any fees they may have been able to earn. The exchange also suggests it is looking into these claims as they are valid.