Stock market sheds N47bn as investors react to interest rate hike

By Chukwuma Umeorah

The domestic equities market on Tuesday lost N47 billion as investors reacted negatively to the hike in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN).

Investors lost N47 billion as the loss as Nigerian Exchange Limited (NGX) All-Share Index (ASI) declined by 0.08 per from 100,568.63 basis points to 100,486.12 basis points. Consequently market capitalization dropped to N56.898 trillion from an opening value of N56.945 trillion reducing year-to-date returns (ytd) to 34.39 per cent.

The downturn was a result of sell pressure in stocks namely UBA, Access Bank, United Capital and 24 other stocks.

Following its two-day meeting, CBN’s Monetary Policy Committee raised the MPR to 26.75 per cent from 26.25 per cent, making equities less attractive compared to fixed-income instruments. The asymmetric corridor changed from +100/-300 to +500/-100 around the MPR, while the liquidity ratio remained at 30 per cent. The cash reserve ratio (CRR) was retained at 45 per cent for deposit money banks and 14 per cent for merchant banks.

Meanwhile At the end Tuesday’s trading session on the local bourse, a total of 280. 92 million units of shares corresponding to a market value of N3.625 billion were traded in 8,403 deals. When compared with the previous NGX trading day, the data shows a 16 per cent decline in volume, a 2 per cent decline in turnover, and a 4 per cent decline in deals.

Market breadth was negative as 27 stocks declined in value while 24 gained. Ikeja Hotel led the gainers with 7.58 per cent share price appreciation closing at N7.10 per share, followed by Linkage Assurance which added 6.9 per cent to close at N0.93 per share.

Caverton added 5.0 per cent closing at N1.47 per share while Sovereign Trust Insurance gained 4.17 per cent to close at N0.50 per share.

On the losing side, University Press came out last with an end-of-day price depreciation of 9.92 per cent closing at N2.27 per share, followed by John Holt losing 9.87 per cent and ended the days trade at N2.83 per share.