Okomu drags NGX to see first dip post-MPC
Femi Otedola, Nigeria’s billionaire businessman and chairman of FBN Holdings has increased his stake in FBN Holdings with N16billion. He bought 534,094,407 shares of FBN Holdings at N30 per share. The transactions were done from September 23 to 25, according to FBN Holdings in its September 26 notification of share dealing by insiders.
Meanwhile, Nigeria’s equities market on Thursday recorded its first negative close since Tuesday’s hike of the monetary policy rate (MPR) by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN). The stock market dipped by 0.47 percent, while investors lost N267billion at the close of trading.
Stocks like Okomu Oil Palm, Cadbury, and Caverton led the league of major laggards at the Nigerian Bourse on Thursday. Okomu lost N30, from N393 to close at N363, down by 7.63percent. Cadbury dipped from N19.70 to N17.85, losing N1.85 or 9.39percent, while Caverton share price decreased from N3.29 to N2.97, losing 32kobo or 9.73 percent.
The Monetary Policy Committee at the end of its two-day meeting on Tuesday surprised market participants by increasing its benchmark interest rate, known as the Monetary Policy Rate (MPR) by 50 basis points to 27.25 percent from 26.75 percent, the fifth straight hike this year. MPC also raised the Cash Reserve Ratio (CRR) of commercial banks by 500 basis point to 50 percent from 45 percent, and that of merchant banks by 200 basis points to 16 percent, while keeping other parameters unchanged.
Read also: CPPE faults CBN’s 27.25% MPR rate hike
“The MPC’s continued tightening to rein in inflation and stabilise the market holds some implications for the financial markets. We anticipate a moderate impact on fixed-income yields, particularly as the government seeks to manage its borrowing costs effectively.
“Consequently, we do not foresee a significant shift of capital away from the equities market, as investor sentiment is likely to remain fundamentals driven despite the policy adjustments,” according to Meristem research analysts in their note post-MPC meeting.
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities market capitalisation decreased from 98,987.42 points and N56.881 trillion respectively to 98,523.56 points and N56.614 trillion. In 9,005 deals, investors exchanged 344,355,846 shares worth N6.609billion. UBA, Access Holdings, Honeywell Flourmills, Sterling Financial Holdings Company and Zenith Bank were actively traded stocks.
Also looking at the market dynamics following MPR adjustment, analysts at Comercio Partners said, “While new bond investors may find higher yields attractive in the short term, existing bondholders could face capital losses as the value of their lower-yielding bonds.”
