Stocks shed over N500bn as CBN hikes benchmark interest rate

Nigeria’s equities market decreased further on Tuesday as the nation’s apex banker – CBN -after a long while increased its benchmark interest rate to 13percent from 11.5percent, in move to check accelerating inflation.
The nation’s stock market lost N519billion or 1.82percent decline, recording its largest daily dip since this month. No thanks to Guinness Nigeria Plc which recorded the highest decline, from day-open high of N98 to N88.20, losing N9.80 or 10percent.

The 285th Monetary Policy Committee (MPC) meeting was concluded on Tuesday and the CBN Governor Godwin Emefiele announced the committee’s decision.

Ahead of the announcement, analysts at Lagos-based United Capital had noted their belief that the appropriate policy decision will be to raise the Monetary Policy Rate (MPR). “First, aggregate price level is spiralling out of control, following the 90basis points surge in April 2022 while inflation is expected to sit pretty outside the CBN’s comfort zone,” the analysts said.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation decreased to 51,949.64 points and N28.006trillion respectively, from preceding day’s highs of 52,911.51 points and N28.525trillion. Also, the market’s positive return year-to-date (YtD) decreased to 21.6 percent.

Read also: For first time in six years, CBN hikes rate to 13%

ETI, Jaiz Bank, Access Holdings, UACN and Transcorp were most traded counters on the local Bourse. In 6,096 deals, investors exchanged 720,192,027 units valued at N8.867billion.

Lagos-based Meristem analysts had on Monday ahead of Treasury Bills auction during the week, expected further profit taking on stocks that have recorded decent price appreciation in recent weeks, adding that as profit taking activities dictate market direction, they expect the market to close in the negative region this week.

Early this week, the National Bureau of Statistics (NBS) first-quarter (Q1) 2022 GDP report shows that Nigerian economy expanded by 3.1percent in real terms despite concerns that the growth the eludes businesses and households.

“While we expect base effects to fade substantially in second-quarter (Q2) 2022, we see upsides from the full reopening of the land borders, lifting of restrictions on SIM registrations, and pre-election spending. With crude theft being the driver of pipeline shutdowns and reduced oil production, we remain downbeat on the oil sector,” said Ibukun Omoyeni and Angela Onotu, both analysts at Vetiva Capital Management in their recent note on Nigeria’s GDP.