Nigerian stock market loses N1.92 trillion amid new CBN foreign subsidiary rule
via Punch Nigeria3 min read
The Nigerian stock market experienced a N1.92 trillion loss on Thursday, driven by sell-offs in banking and cement stocks. This decline followed new regulatory guidelines from the Central Bank of Nigeria CBN concerning foreign subsidiaries of banks. The market capitalization dropped by 1.23 percent, from N155.780 trillion to N153.858 trillion, and the All-Share Index ASI fell by 1.23 percent to close at 239,734.61. Investment banker and stockbroker Mr. Tajudeen Olayinka attributed the decline to investor reactions to the CBN directive, which mandates banks operating in foreign countries to limit investments in foreign subsidiaries to 10 percent of their equity capital or shareholders' funds. Banks exceeding this threshold are required to divest. Mr. Olayinka explained that the market interpreted this as the CBN integrating foreign revenues and reserves into existing regulatory capital, potentially impacting corporate payout capabilities. This led to a repricing of international banking stocks, which then affected other highly capitalized equities, including cement companies. Despite this, Mr. Olayinka believes the development is temporary, stating that the affected banks remain fundamentally strong and undervalued, with high upside potentials.
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This summary was AI-generated from a story originally published by Punch Nigeria.
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