Investors lose N1.5trn in stocks over new monetary policy

Nigerian stock market

Investors lose N1.5trn in stocks over new monetary policy

Investors in the Nigerian stock market lost about N1.5 trillion of their investment in the stock market following the massive adjustments in the Central Bank of Nigeria, CBN’s Monetary Policy Rate, MPR, at the Monetary Policy Committee, MPC, meeting yesterday.

Recall that the meeting raised the MPR by unprecedented 400 basis points to an equally unprecedented MPR height of 22.75 percent from 18.75 percent.

The NGX market capitalisation, which represents the total value of investment on the Nigerian Exchange Limited, NGX, dropped to N54.317 trillion at the close of trading on Wednesday from N55.810 trillion recorded on Monday.

On Tuesday, when the Governor of the CBN, Yemi Cardoso, announced the new MPR, the stock market went down with investors’ losing N773 billion and on Wednesday it dropped further by N720 billion.

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In the same vein, another major stock market gauge, NGX All Share Index, ASI, declined for the two consecutive days by 2.7 percent to close at 99,266.02 points from 101,995.53 points it closed on Monday.

Trading analysis showed that the NGX ASI declined on Tuesday and Wednesday by 1.4 % and 1.3% respectively.

Market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 4.8 percent. A total of 396.23million shares valued at N5.83billion were exchanged in 10,549 deals.

Analysts attributed the bearish trend to selloffs in highly priced stocks and profit taking in blue chip companies that weighed on the benchmark NGX All Share index which closed lower, as the market reacted immediately to the 4% increase in MPR.

Reacting to this development, analysts at Investdata stated: “This position did not come as a surprise to many, however, since Olayemi Cardoso, the new CBN Governor, had signaled this since November 2023, coupled with the failure to hold a policy meeting for so long a time, with inflation rate climbing to almost 28-year high at 29.9%. It is also the highest since Nigeria returned to democracy in May 1999, while the Naira depreciation is hitting almost 70% against dollar in the New Year 2024.”