The Nigerian stock market experienced a downturn for the second consecutive day on Tuesday, depreciating by 1.38 per cent. This decline was in response to the outcome of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN).
During the bi-monthly MPC meeting, the CBN raised the benchmark lending rate by 400 basis points to 22.75 per cent, up from 18.75 per cent, in an effort to curb inflation. This meeting marked the first under the leadership of Mr Olayemi Cardoso, the CBN Governor, who assumed office in September 2023.
As a result of these developments, the All-Share Index (ASI) fell by 1.38 per cent or 1,412.64 points, closing at 100,582.89 points, compared to the 101,995.53 points recorded on Monday. The market capitalisation also declined, shedding N773 billion or 1.38 per cent to close at N55.037 trillion, compared to N55.810 trillion recorded in the previous session. Consequently, the Year-To-Date return dropped to 34.52 per cent.
The market’s losses were primarily driven by sell-offs in the stocks of MTN Nigeria, FBN Holdings, and Guaranty Trust Holding Company (GTCO), among others. Meanwhile, a total of 280.46 million shares valued at N6.12 billion were exchanged in 9,141 deals, compared to the 294.32 million shares valued at N6.72 billion exchanged in 9,957 deals in the previous session. An analysis of the market activities showed that trade turnover settled lower relative to the previous session, with the value of transactions down by 8.96 per cent.
Mr David Adonri, Vice Chairman of Highcap Securities Ltd., commented on the situation, stating that investment in the capital market is susceptible to changes in monetary policy. He explained that the drop in the market’s performance was due to the CBN’s further tightening of monetary policy. He noted that the CBN MPC’s decision meant that the interest rate would increase significantly, which would lead to the migration of financial assets from equity to debt.
On the losers’ table, FBN Holdings and Multiverse Mining and Exploration Plc led in percentage terms, both dropping by 10 per cent to close at N30.60 and N15.30 per share, respectively. Conversely, Africa Prudential Plc and Omatek Venture led the gainers’ table in percentage terms, both rising by 9.86 per cent to close at N7.80 and 78k per share, respectively.
On the activity table, Transcorp led in volume with 44.41 million shares at the value of N583.52, while the National Salt Company of Nigeria traded 13.80 million shares worth N893.68 million to lead the chart in value.