(L-R) Sede Giwa Osagie-Ikeji, chief operating officer, Metro Taxi Limited; Niyi Oguntoyinbo, MD and Olanrewaju Oniyitan, principal business consultant, W-Holistic Business Solution, at a briefing to unveil Metro Taxi in Lagos.

ANALYSIS of market performance since the beginning of 2010 shows that banking stocks failed far behind the general market growth as well as those of other sectors, growing by two per cent as against 10 per cent growth by the general market, 25 per cent by the oil and gas sector, 20 percent by the NSE 30 and 47 per cent by the food and beverage sector respectively.
This development, experts believe, may have been the main reason for the liquidity squeeze in the economy as the overall capitalization of banks has continued to nosedive in the last nine months, resulting in a perceived massive depreciation in the value of the stocks that have been relied upon as the major indicator of growth in the Nigerian economy.
Investigations show that the NSE All Share Index grew by 10.33 per cent, having opened the year with 20,838.90 points on the first day of trading. By the close of trading on Thursday last week, however, the number stood at 22,993.43 points, an addition of 2154.43 points or 10.33 per cent.
Banking stocks, though, could not catch up with the general market trend as it grew by a pantry 2.21 per cent. According to the NSE Daily Official List, the sectoral index, The NSE Banking, opened the year at 344.50 points. That index stood at 337.15 points at the close of market on Thursday last week. This was a reduction of 7.15 points or 2.12 per cent.
Other sectors faired better. For example, the NSE Oil and Gas grew by 25.8 per cent; NSE Food/Beverage grew by 45.67 per cent while NSE 30 grew by 20.15 per cent. The insurance sector was the only sector that performed worse than the banking sector. It dropped by 31 per cent or 77.24 points. The NSE Insurance opened the year with 248.98 points and closed at 171.74 points.
The Food and Beverage sector was obviously the market leader with a 45.67 per cent gain. Cadbury Nigeria Plc made the most gain in that sector with a 125 per cent gain. The company traded at N10.49 at the beginning of the year. By the close of trading on Thursday, the stock stood at N23.61, recording a gain of N13.12 or 125 per cent.
Market research by BusinessWorld indicates that the erosion in the confidence of investors in the stock market and the crisis in the banking industry may have further contributed to the level of depreciation banking stocks have experienced over the past one year. This development has become very worrisome considering the fact that the banking sector has the highest capitalisation in the market and a poor record on its growth profile indicates a poor value of returns in the market.
A situation where some of the very highly capitalized banks like Union Bank of Nigeria Plc, First Bank of Nigeria Plc, Intercontinental Bank Plc and Oceanic Bank International Plc did not have much to pay to their shareholders could be a major source of discouragement for those that ordinarily should be investing in banking stocks.