Investors in the Nigerian equity market witnessed significant losses amounting to about N1.55 trillion in February due to high yields in the fixed-income market. The hike in the monetary policy rate to 22.75 percent is anticipated to further deter interest in the capital market in the short- to medium-term, with investors seeking better returns elsewhere.
At the start of February, the Nigerian Exchange commenced with the All-Share Index and market capitalization at 102,802.25 and N56.26 trillion, respectively. However, by the end of the month, the index closed at 99,980.30 and market capitalization at N54.71 trillion, representing a 2.75 percent decline.
Analysts’ Projections
David Adonri, Vice Chairman of Highcap Securities, commented that while the market pullback was expected in February, further corrections are anticipated as full-year results of listed companies are published. Adonri emphasized that the recent hike in the monetary policy rate would moderate funds flowing to the capital market, which he viewed positively in the short term.
Impact of Monetary Policy Rate Hike
According to Cowry Asset Management Limited, the increase in the Monetary Policy Rate (MPR) to 22.75 percent and rising yields in the fixed-income market are likely to influence investor behavior and slow down the flow of funds into the capital market.
Weekly Performance and Sectoral Analysis
During the past week, the Nigerian bourse recorded a significant dip, with the All-Share Index declining by 3.27 percent to 98,751.98 points. The Insurance and Industrial goods sectors were most affected, losing 3.40 percent and 3.87 percent, respectively.
Trading Statistics
A total of 1.88 billion units of shares worth N34.149 billion were exchanged during the week, with the financial services industry dominating trading by volume and value. Transnational Corporation Plc, United Bank for Africa Plc, and Access Holdings Plc were the top three equities traded by volume.
Gainers and Losers
While some stocks such as Juli Plc, PZ Cussons, and Sterling Financial Holdings experienced gains, others like MTN Nigeria, Sunu Assurances, and Nestle Nigeria recorded losses.
Outlook for the Coming Week
Analysts have projected a potential lift in the market as investors react to corporate earnings scorecards and announced corporate actions in the coming week.
The equity market continues to navigate challenges posed by high yields in the fixed-income market and the recent hike in the monetary policy rate. Investors remain cautious as they assess the impact of these developments on market performance in the near term.
