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Nigerian Stock Market Slips Last Week as CBN Raises Interest Rates to Curb Inflation

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Nigerian Exchange Limited - Investors King

The Nigerian Stock Market dipped last week as the Central Bank of Nigeria (CBN) implemented further tightening measures to address rising inflation.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation both depreciated by 0.52% to close the week at 97,612.51 points and N55.218 trillion, respectively.

This decline in the market coincided with the Monetary Policy Committee (MPC) of the CBN’s decision to hike the policy rate by 150 basis points (bps) to 26.25%.

The committee also retained the cash reserve ratio (CRR) for deposit money banks at 45%, the asymmetric corridor at +100bps/-300bps, and the liquidity ratio at 30%.

“The market remains under pressure as investors pursue safety in the fixed income space. However, given the strong sell-side action in the banking space, we anticipate some buy-side action in the coming week as traders seek to take advantage of some stocks that have been beaten down in recent sessions,” noted analysts from Lagos-based Vetiva Research in their May 24 report.

Despite the overall market downturn, certain sectors showed resilience.

Indices such as NGX MERI Value, NGX Consumer Goods, NGX Oil and Gas, NGX Lotus II, and NGX Industrial Goods saw gains of 1.74%, 0.31%, 0.72%, 0.44%, and 0.19%, respectively.

The NGX ASeM index, however, closed flat.

A closer look at the week’s trading activities revealed that twenty-four equities appreciated in price, down from twenty-eight in the previous week.

Conversely, fifty-three equities saw a decline in price, an increase from fifty-one in the preceding week, while seventy-seven equities remained unchanged, slightly up from seventy-six.

The financial services industry led the trading activity with 1.577 billion shares valued at N30.359 billion traded in 20,697 deals, accounting for 79.41% and 74.56% of the total equity turnover volume and value, respectively.

The conglomerates industry followed with 125.342 million shares worth N1.387 billion in 2,283 deals.

The consumer goods industry also recorded significant activity, with a turnover of 77.327 million shares worth N2.446 billion in 4,916 deals.

Among individual equities, Ecobank Transnational Incorporated Plc, Access Holdings Plc, and United Bank for Africa Plc were the top three in terms of trading volume, accounting for 1.006 billion shares worth N20.115 billion in 6,849 deals.

This represented 50.67% and 49.40% of the total equity turnover volume and value, respectively.

Also, 5,340 units of exchange-traded products valued at N2.350 million were traded in 111 deals, compared to 4,103 units valued at N2.429 million in 110 deals the previous week.

The bond market also saw significant activity, with 82,778 units valued at N80.570 million traded in 18 deals, compared to 9,282 units valued at N8.945 million traded in 24 deals the preceding week.

The MPC’s decision to raise interest rates is part of a broader strategy to rein in inflation and stabilize the economy.

However, the immediate impact on the stock market has been negative, as investors seek safer investments in the fixed income space.

Market participants will be closely watching the coming weeks for potential buy-side opportunities and further economic indicators that could influence trading strategies.

As the Nigerian stock market navigates these turbulent times, the actions of the CBN and global economic conditions will continue to play pivotal roles in shaping market dynamics.

Investors are advised to stay informed and consider the long-term implications of these policy decisions on their portfolios.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigerian Exchange Limited

Equity Market Rebounds by N144bn, Led by Nigerian Breweries and NEM Insurance

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The Nigerian equity market surged by N144 billion on Thursday, largely on the strong performances of key players like Nigerian Breweries and NEM Insurance.

This recovery comes after the market experienced a dip earlier in the week.

The market indices closed with the All Share Index (ASI) rising by 0.2% to settle at 99,832.25 points, while market capitalization increased to N56.47 trillion.

Despite lower trading volumes and values compared to previous sessions, the market saw increased activity in terms of the number of deals, which rose by 20% to 9,686.

Market Activity and Performance

Trading on Thursday resumed following the Democracy Day holiday, with 502.6 million shares exchanged in various deals valued at N8.65 billion.

The bullish trend was evident with 30 gainers outnumbering 18 losers, highlighting the positive sentiment that dominated trading.

Top Gainers and Losers

Nigerian Breweries emerged as a top performer with a significant 10% increase in its share price to close at N31.90. Unity Bank followed closely with a 9.91% gain, closing at N1.22 per share, while NEM Insurance recorded a 9.77% increase, ending the trading session at N9.55 per share.

Conversely, Ecobank Transnational led the losers’ chart with a 9.92% decline, closing at N21.35 per share. Daar Communications and C&I Leasing also experienced losses, shedding 8.77% and 7.14% respectively.

Trading Insights

Zenith Bank emerged as the most traded stock by volume, with 71.2 million shares exchanged, followed by AIICO Insurance with 67.3 million shares and Access Holdings with 58.5 million shares.

The trading activities were spread across various sectors, with notable gains observed in the insurance, banking, pension, and consumer goods industries.

Market Outlook

The rebound in the equity market reflects renewed investor confidence following recent downturns. Analysts anticipate continued volatility amid global economic uncertainties but remain optimistic about the resilience of Nigerian stocks in the long term.

Overall, the market’s recovery by N144 billion underscores the dynamism of Nigeria’s financial landscape and the strategic positioning of key market players like Nigerian Breweries and NEM Insurance in driving positive market sentiment and performance.

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Nigerian Exchange Limited

Nigerian Equity Market Sees N92.32bn Loss Amid Declines in Key Stocks

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The Nigerian equity market experienced a significant downturn on Tuesday, losing N92.32 billion in market value.

This decline was largely driven by drops in the share prices of key companies, including National Salt Company, Thomas Wyatt Nigeria, and May and Baker Nigeria.

The market capitalisation and the All-Share Index (ASI) decreased by 0.16 per cent, closing at N56.36 trillion and 99,630.51 points, respectively. This downturn affected the year-to-date return, which fell from 33.5 per cent to 33.24 per cent.

Despite the overall market decline, market breadth remained positive, with 29 stocks advancing against 19 that declined, across 8,064 deals. This indicates a mixed sentiment among investors, with some stocks seeing substantial gains.

Key Gainers and Losers

Total Nigeria led the list of gainers with a 9.98 percent increase to close at N388.90. Presco followed closely with a 9.97 percent rise to N323.30, and UPDC leveraged a 9.92 percent gain to end the day at N1.33.

Conversely, National Salt Company recorded a significant drop of 9.91 percent to close at N36.80. Thomas Wyatt Nigeria saw a 9.66 percent decrease to N1.59, and May and Baker Nigeria fell by 7.13 percent to close at N5.60.

Trading Volume Leaders

In terms of trading volume, Fidelity Bank led the market with 293.18 million shares exchanged in 340 deals. Nigerian Breweries followed, trading 101.584 million shares in 145 deals, reflecting strong investor interest in these companies.

Market Dynamics

The losses come on the heels of a robust performance on Monday, where the equity market gained N323 billion, buoyed by appreciations in stocks like Flour Mills Nigeria, Total Nigeria, and Access Holding.

The contrasting performance over two consecutive days underscores the volatility in the market.

Investor Sentiment

The decline in the equity market highlights the fluctuating investor sentiment influenced by various macroeconomic factors and corporate performance. Despite the losses, the positive market breadth indicates underlying resilience, as a larger number of stocks posted gains than losses.

Economic Context

The broader economic environment continues to pose challenges, with inflationary pressures and currency devaluation impacting investor confidence. However, strategic moves by companies and expectations of economic reforms provide some optimism for market recovery.

Outlook

Analysts suggest that the market could see further fluctuations in the short term, with investor focus likely to remain on corporate earnings reports and economic policy developments. The ability of companies to navigate the current economic landscape will be crucial in determining future market performance.

As the market adjusts to these dynamics, stakeholders remain hopeful that strategic investments and economic reforms will foster a more stable and growth-oriented environment for the Nigerian equity market.

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Nigerian Exchange Limited

Flour Mills Nigeria, Others Bolster Nigerian Equity by N323 Billion

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Flour Mills Nigeria, alongside other key players in the Nigerian equity market, propelled the market to a significant gain of N323 billion in market capitalization on Monday.

The bullish momentum saw the market capitalization and the All Share index rising by 0.58 percent to settle at N56.52 trillion and 99,793.71 points, respectively.

This surge represents a notable increase from the previous trading session and contributed to a year-to-date return of 33.5 percent, up from 32.8 percent.

Market participants witnessed heightened activity levels as both volume and value exchanged surged by 148.3 percent and 83.6 percent, reaching 963.5 million units and N13.5 billion, respectively.

The banking and oil & gas sectors emerged as the leading gainers, with respective increases of 2.7 percent and 3.1 percent.

This sectoral performance further fueled investor optimism and contributed to the overall market rally.

Flour Mills Nigeria stole the spotlight among gainers with a remarkable 10 percent appreciation, closing at N41.80 per share.

Similarly, Total Nigeria and Access Holding recorded significant gains of 9.88 percent and 9.86 percent, closing at N353.60 and N18.95, respectively.

However, not all stocks shared in the bullish sentiment, as E-Tranzact International, Daar Communications, and Champion Breweries emerged as the top losers, shedding 9.90 percent, 9.52 percent, and 6.67 percent, respectively.

Fidelity Bank emerged as the most traded security by value, with N6.03 billion worth of shares exchanged in 417 deals.

On the other hand, Abbey Mortgage Bank led the volume chart with 2,919 units traded in 12 deals.

The significant surge in market capitalization and the robust trading activity reflect growing investor confidence and optimism in the Nigerian equity market.

Despite recent fluctuations, the market continues to attract interest from both domestic and foreign investors, driven by promising economic indicators and corporate performance.

Looking ahead, analysts anticipate continued market resilience, with expectations of increased capital raising operations and sustained investor appetite for high-yielding assets.

However, uncertainties surrounding interest rate movements and global economic dynamics remain key factors influencing market sentiment in the near term.

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