Africa (Commonwealth Union) _The Nigerian stock market faced a significant setback, shedding N209 billion in market capitalization on Wednesday as investors reacted to the Central Bank of Nigeria’s (CBN) decision to raise interest rates. The Monetary Policy Committee (MPC) increased the Monetary Policy Rate (MPR) by 25 basis points to 27.50% in November, up from 27.25% in September. CBN Governor Olayemi Cardoso announced this adjustment after the 298th MPC meeting in response to the persistent rise in inflation, which reached 33.87% in October.
The aftermath of this decision was evident at Nigerian Exchange Ltd. (NGX), where market capitalization dropped from N59.178 trillion to N58.969 trillion, marking a 0.35% decline. Similarly, the All-Share Index fell by 330 points to close at 97,296.57, pulling the year-to-date return down to 30.12%.
Declines in key stocks such as Aradel, Fidelity Bank, and Nigerian Breweries contributed to this downturn, reflecting a negative market breadth with 26 stocks losing value while only 23 gained. John Holt led the losers, falling by 10% to N9.90 per share, whereas Sunu Assurances topped the gainers with a 9.97% increase to N4.19 per share.
Market activity surged despite the overall slump, with 822.46 million shares worth N10.29 billion traded across 9,385 deals, representing a 28.07% rise in transaction value compared to the previous session. Japaul Gold emerged as the leader in trading volume, with 115.93 million shares exchanged, while Guaranty Trust Holding Company (GTCO) led in transaction value at N1.52 billion.
Market analysts from Cowry Asset Management Ltd. had predicted the potential for mixed reactions, noting that the rate hike could influence interest rate expectations and investment strategies. However, they also pointed to opportunities for investors to strategically position themselves in fundamentally robust stocks as November trading concludes and fund managers gear up for December’s window-dressing activities.
As the market adjusts to this monetary shift, the interplay between inflation control and investor sentiment remains critical, signalling a challenging yet dynamic close to the year.
