Stocks Further Shed 0.17% as Investors Lose Confidence in CBN FX Policy

By Dipo Olowookere

Nigerian stocks received further beatings on Tuesday as investors began to lose confidence in the foreign exchange (FX) policy of the Central Bank of Nigeria (CBN).

On Monday, the acting CBN Governor, Mr Folashodun Shonubi, after a meeting with President Bola Tinubu at the State House in Abuja, said plans are being made to stabilise the Naira, warning that speculators will soon regret selling their local currency assets for Dollars.

He said this after the audit accounts of the apex bank for the 2022 fiscal year showed that what is left in the external reserves, about $20 billion, may not be enough to defend the Nigerian currency, triggering fears among some investors.

At the market yesterday, traders offloaded some of their equities, apparently in panic so as not to be caught off-guard. Some of them are selling to buy forex to edge their funds against Naira.

Business Post observed that apart from the insurance counter, which appreciated by 1.32 per cent, every other sector finished lower at the close of transactions.

The consumer goods space lost 0.68 per cent, the energy index depreciated by 0.40 per cent, the banking sector went down by 0.08 per cent, and the industrial goods counter finished lower by 0.06 per cent.

As a result, the All-Share Index (ASI) decreased by 107.39 points to 64,928.98 points from 65,036.37 points, and the market capitalisation moderated by N58 billion to N35.357 trillion from N35.415 trillion.

Eterna ended the trading session as the heaviest price loser as it shed 9.86 per cent to trade at N16.00, Sunu Assurance trended downward by 9.62 per cent to 94 Kobo, Omatek declined by 8.11 per cent to 34 Kobo, Unilever Nigeria slumped by 7.05 per cent to N14.50, and AIICO Insurance dropped 5.63 per cent to sell at 67 Kobo.

The biggest price gainer was Tantalizers as it improved by 10.00 per cent to 44 Kobo, Ikeja Hotel grew by 9.82 per cent to N3.13, Cornerstone Insurance expanded by 9.30 per cent to N1.41, The Initiates appreciated by 8.82 per cent to N1.11, and Linkage Assurance rose by 8.33 per cent to 91 Kobo.

At the close of business, there were 31 price losers and 19 price gainers, indicating a negative market breadth index and a weak investor sentiment.

Apart from the CBN policy, the market reacted to the inflation figures of July 2023 released by the National Bureau of Statistics (NBS) on Tuesday.

The agency revealed that the average price of goods and services increased on a year-on-year basis by 24.08 per cent. In the previous month, inflation rose by 22.79 per cent.

This may have also put the Nigerian Exchange (NGX) Limited under selling pressure yesterday, as the level of activity increased, with the trading volume, value, and the number of deals rising by 8.30 per cent, 11.91 per cent, and 6.73 per cent, respectively.

This was because the bourse recorded the sale of 280.5 million equities worth N4.7 billion in 6,296 deals compared with the 259.0 million equities worth N4.2 billion traded in 5,899 deals on Monday.

For another trading session, Transcorp was the most active after selling 36.5 million stocks valued at N147.5 million, followed by UBA, which sold 23.2 million shares for N325.4 million. Access Holdings transacted 17.7 million equities worth N299.4 million, Sterling Holdings exchanged 16.0 million shares worth N57.5 million, and Japaul traded 11.4 million stocks valued at N11.0 million.