Nigerian Stock Market Plummets ₦209bn After Central Bank Rate Hike
Investors React Negatively to Monetary Policy Committee's Decision to Raise Interest Rates
The Nigerian stock market experienced a significant downturn on Wednesday, losing ₦b209 billion in market capitalization following the Central Bank of Nigeria’s (CBN) decision to increase the Monetary Policy Rate (MPR) to 27.50 per cent.
The market’s decline was swift and substantial, with the Nigerian Exchange Ltd. (NGX) market capitalization dropping from ₦59.178 trillion to ₦58.969 trillion, representing a 0.35 per cent decrease. The All-Share Index fell by 330 points, closing at 97,296.57 and reducing the Year-to-Date return to 30.12 per cent.
CBN Governor Olayemi Cardoso announced the 25 basis point rate hike during the 298th Monetary Policy Committee meeting in Abuja, citing the need to combat Nigeria’s soaring inflation rate of 33.87 per cent in October.
The market reaction was mixed, with 26 stocks declining and 23 gaining. Notable losers included Aradel, Fidelity Bank, and Nigerian Breweries, with JohnHolt leading the downward trend by falling 10 per cent to N9.90 per share. In contrast, Sunu Assurances emerged as a bright spot, rising 9.97 per cent to N4.19 per share.
Trading volume increased significantly, with 822.46 million shares valued at ₦10.29 billion exchanged across 9,385 deals. This represented a 28.07 per cent rise in transaction value compared to the previous session. Japaul Gold dominated in trading volume with 115.93 million shares, while Guaranty Trust Holding Company (GTCO) led in value transactions at ₦1.52 billion.
Market analysts from Cowry Asset Management Ltd. had anticipated mixed market directions, recognizing the potential impact of the MPC’s decision on interest rate expectations and investment strategies. They also suggested opportunities for strategic positioning in fundamentally strong stocks as the November trading period concludes and fund managers prepare for December’s window-dressing activities.
