Stocks Shed 0.08% in Reaction to CBN 0.50% Rate Hike

By Dipo Olowookere

The stock market reacted negatively to the continued hawkish stance of the Central Bank of Nigeria (CBN) on interest rates amid soaring inflation.

The central bank further tightened its monetary policy yesterday by 50 basis points or 0.50 per cent to 26.75 per cent after its Monetary Policy Committee (MPC) meeting in Abuja.

Investors pounced on this to reduce their exposure to equities, leaving the Nigerian Exchange (NGX) Limited down by 0.08 per cent at the close of transactions.

As a result, the All-Share Index (ASI) went down by 82.48 points to 100,486.12 points from 100,568.60 points, and the market capitalisation decreased by N46 billion to settle at N56.899 trillion versus Monday’s N56.945 trillion.

Business Post reports that the banking counter depreciated by 0.67 per cent and the insurance index fell by 0.15 per cent, while the consumer goods space appreciated by 0.06 per cent, with the energy and industrial goods sector closing flat.

Investor sentiment was weak during the trading day as the bourse ended with 27 declining shares and 14 appreciating shares, representing a negative market breadth index.

University Press lost 9.92 per cent to close at N2.27, John Holt shed 9.87 per cent to N2.83, Omatek declined by 9.46 per cent to 67 Kobo, Deap Capital plunged by 8.93 per cent to 51 Kobo, and Secure Electronic Technology moderated by 7.02 per cent to 53 Kobo.

But Ikeja Hotel gained 7.58 per cent to quote at N7.10, Linkage Assurance rose by 6.90 per cent to 93 Kobo, Caverton jumped by 5.00 per cent to N1.47, Sovereign Trust Insurance advanced by 4.17 per cent to 50 Kobo, and Consolidated Hallmark appreciated by 2.96 per cent to N1.39.

The market was relatively quiet yesterday as traders fixed their eyes on the rate announcement and prepared for the treasury bills auction today.

This led to a decline in the trading volume, value and the number of deals by 16.32 per cent, 2.70 per cent, and 4.08 per cent apiece.

A total of 280.9 million equities worth N3.6 billion exchanged hands in 8,403 deals on Tuesday versus the 335.7 million equities worth N3.7 billion traded in 8,760 deals on Monday.

Veritas Kapital topped the activity chart with 22.5 million stocks valued at N23.0 million, United Capital transacted 20.9 million shares worth N817.1 million, Jaiz Bank exchanged 20.8 million equities for N45.1 million, Access Holdings traded 20.4 million stocks worth N3.9 billion, and Prestige Assurance sold 16.8 million shares for N8.6 million.