Stock market defies rate hike to record first gain this week

Nigeria’s equities market on Wednesday defied recent rate hike to record its first gain this week.

Tuesday’s further raise in the Monetary Policy Rate (MPR) to 24.75 percent triggered expectations that investors will continue their search for higher yields in the fixed income market.

Read also: Stock market in red as MPC hikes rate again

Rather, the stock market on Wednesday failed to continue Tuesday’s negative path, rising by 0.32percent or N188billion at the close of trading as investors saw re-entry opportunities in value stocks as they position ahead of corporate actions and dividend announcements, particularly in the banking sector.

“We expect strong corporate actions and dividend announcements to stand as a primary motivator toward the equities market, through to the first two weeks of April,” according to United Capital research analysts.

In its recently released results for the full year ended December 31, 2023, Access Holdings Plc announced final dividend of N1.80 kobo for every ordinary share of 50 kobo each, subject to appropriate withholding tax (bringing the total dividend for 2023 financial year to N2.10 kobo.

This proposed final dividend according to Access Holdings will be paid to shareholders whose names appear on the Register of Members as at the close of business on April 10, 2024.

Ahead of more banks releasing their full year scorecards, the market has continued to see both local and foreign interest in banking stocks. As at Wednesday, Access Holdings, Zenith Bank, UBA, GTCO, and Transcorp accounted for reasonable percentage of traded volume. In 10,260 deals, investors exchanged 499,706,856 shares worth N12.410 billion.

At the close of trading on Wednesday, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities market capitalisation increased from preceding day’s lows of 103,952.47 points and N58.775trillion respectively to 104,283.64 points and N58.963trillion. The stock market’s year-to-date (YtD) return stood at slightly higher at 39.47percent.

Stocks that lead the league of advancers include: CWG which increased from N6.50 to N7.15, after adding 65kobo or 10percent. Juli followed after rising from N8.63 to N9.49, up by 86kobo or 9.97percent, and FTN Cocoa which went up from N1.61 to N1.77, adding 16kobo or 9.94percent.

The Monetary Policy Committee (MPC) on Tuesday raised the Monetary Policy Rate (MPR) to 24.75 percent, representing 200 basis points increase, a development market watchers said will potentially constrain liquidity in the equities market space.

Read also: Julius Berger, ETI, NEM Insurance, others push stock market higher

Meristem research analysts who earlier this week had anticipated subdued performance in the equities market due to rate hike by the MPC which was expected to influence higher rates at the Wednesday’s T-Bills auction, however noted that investors may opt to retain their equity holdings if rates do not meet anticipated levels, “resulting in minimal outflows to the fixed income market”.

The Central Bank of Nigeria (CBN) on Wednesday held a Treasury Bills (T-Bills) Primary Market Auction (PMA). At the PMA, existing T-Bills totalling N161.33billion (N17.61billion, N1.56billion and N142.16billion across the 91-day, 182-day, and 364-day instruments, respectively) matured and were rolled over.