Thursday, July 14, 2016 3.38 PM / Proshare Markets
The recent takeover of Skye Bank by the Central Bank of Nigeria (CBN) on July 4, 2016 has raised a lot of concerns regarding the state of the Nigerian Banking Industry, as continuous downgrades by international rating agencies further intensifies this fears. Following CBN’s intervention on Skye Bank, a tracking analysis of the trading activities of the stock revealed some smart-trading patterns in its share price and volume. The tracking analysis covers two weeks before the CBN takeover and the five days after.
Analysis of market data showed that the market value of the bank maintained a steady decline, with daily average loss of 7.91% as at July 13, 2016 and 5days average loss of -8.58% after CBN takeover. This puts the 5days loss at 36%, representing N5.27billion loss in Market capitalisation.
Also, investors had exchanged an average volume of 9.61million shares in the last 5days in which volume analysis had revealed opportunistic buying from smart investors. This implies that active mop-up and sell-down are simultaneously going on since there were no active ‘market-makers’ in the market for now. In addition, it suggests that some still believe all hope is not lost concerning Skyebank, as the last volume traded moved up by 155%, indicating sustained opportunistic buying tendency towards the bank’s shares. This further raises curiosity as to who the buyers are and what the future expectations are.
Source: NSE, TheAnalyst
Taking a look at market data two weeks before the takeover by CBN, extensive volume analysis revealed that volume traded surged by 906% on June 15, 2016 (13days before CBN action)- a volume spike to the tune of 74.56million units, which remains the highest daily volume traded since February 15, 2016.
Since then, the share price of the bank remained on a downward trend shedding 13% of its market value- and gained falling momentum on CBN takeover. Our deductions represent that some traders/investors could have had a fore-knowledge of this intervention and taken cover before the regulatory actions, which pummelled the market value considerably. We would continue to track this development, as we further seek clarity to ensure investors are kept abreast of happenings in the market.
Source: NSE, TheAnalyst
Highlight of our Observations
· Price maintains falling pattern
· 5days Average price fall stands at -8.58% in last 5days
· Daily average price fall stands at -7.91% against -8.40% recorded previously
· Average sell-down Volume stands at 9.61million shares
· There were buyers mopping
· Last traded Volume surged by 155%
· 13days to CBN takeover, there was a surge of 906% in volume traded
· 74.56million units traded on June 15, 2016 (the highest daily volume so far since February 17, 2015)
· Since then, the share price has been a steady decline but gained falling momentum on CBN takeover
· Mop-up or Sell-Off?
· Who are the opportunistic buyers? (Not Market Markers!)
· Who are offloading?
· Fresh Surge in Volume by 155%- A fresh interest?
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