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Nigeria stocks fall amid rate hike

Stock market records marginal gain, Naira stable at 900/$

Nigeria’s equities market on Tuesday failed to sustain previous day’s gain as the market decreased by 0.06percent or N15billion at the close of trading.

The Central Bank of Nigeria (CBN) on Tuesday after the two-day Monetary Policy Committee (MPC) meeting in Abuja, raised its benchmark interest rate, known as Monetary Policy Rate (MPR) to 15.5 Percent, the third straight hike this year. The CBN also raised the Cash Reserve Ratio (CRR) to 32.5 percent from 27.5 percent.

The MPC decision was in consideration of the persistent rise in inflation rate and fragile growth. Nigeria’s headline inflation accelerated to the highest level in 17 years to 20.52 percent in August 2022, from 19.64 percent in the previous month.

Read also: Naira under pressure as MPC decides on rate today

The past few months have not been rewarding for Nigerian equity investors as increasingly hawkish monetary policy and the resultant rise in market interest rates continue to dampen sentiment on the Nigerian Exchange.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation depreciated from preceding day’s highs of 49,189.32 points and N26.532trillion respectively to 49,161.45 points and N26.517trillion.

Also, the market’s positive return year-to-date (YtD) decreased to +15.09percent.

“The NGX All-Share Index has been in correction territory for just over a month and is set to record its first quarterly fall since second quarter (Q2) 2021. Nigerian equity investors seem to either be ignoring this year’s solid earnings growth or demanding more earnings growth from companies,” said Coronation Research analysts in their September 26 note tilted “Is there still value in Nigerian stocks?”