Stock market sees first dip since rate hike

Nigeria’s equities market on Monday recorded its first negative close since the Monetary Policy Rate (MPR) hike to 16.50 percent.

The market decreased by 0.25 percent, no thanks to stocks like Beta Glass, SCOA, Jaiz Bank and other major laggards.

The negative close pushed down equities market’s positive return year-to-date (YtD) to 11.05 percent. Though, the market has increased by 8.21 percent in this November.

“We expect the impact of the recent 100 basis points (bps) MPR hike to surface in the local bourse, as investors will look to book profits from the recent rally,” United Capital research analysts sai.

The analysts expect money market yields to continue to respond to the MPC’s persistent policy tightening, driving renewed interest from investors. “In addition, technical signals indicate the market is due a breather following the extended rally,” they added.

Read also: Stock market defies rate hike, gains N145bn

In 3,781 deals on Monday, investors exchanged 279,282,802 shares valued at N1.562billion.

The Nigerian Exchange Limited (NGX) All Share Index (ASI) and equities market capitalisation decreased to 47,436.45 points and N25.837trillion.

Beta Glass decreased most, from N43.95 to N39.60, losing N4.35 or 9.90 percent. It was followed by SCOA which dropped from a high of
N1.17 to N1.06, losing 11kobo or 9.40percent.

“The decision of the Monetary Policy Committee (MPC) to increase the Monetary Policy Rate (MPR) by an additional 100 basis points (bps) to 16.50percent means fixed income instruments yield is most likely to further rise. However, we think that investors have fully priced higher MPR into equities tickers’ valuation.

“Thus, we do not expect a significant negative effect from the higher MPR. With a market breadth of 2.75x, the general market seems bullish although much of the gains are attributable to heavyweight tickers. While we do not rule out the likelihood of profit taking on these heavyweights, we expect the overall positive sentiment to prevail. Overall, we expect the market to close in the positive region this week,” Meristem research analysts said.