Stock market tumbles as investors lose N173b, amid interest rate hike

..Banks stocks, others plummet, as investors opt for fixed market

The CBN decision to tackle rising inflation through aggressive monetary tightening, which has pushed the Monetary Policy Rate (MPC) by 150 basis points to 26.25 per cent from 24.75 per cent is taking a huge toll on the stock market as investors wealth dipped by over N173 billion.

Market capitalisation of listed equities, which stood at N55,597 trillion on Tuesday, May 21, 2024, depreciated by N173 billion to close at N55,424 trillion yesterday. Similarly, the All-share index, which measure the performance of listed equities dipped by 149.08 points or 0.2 per cent from 98.128.00 to 97.978.02. Indeed, it was not cheery news in the stock market on Tuesday when the third rate hike pronouncement was made as the market was still recovering from the shocks of the previous hike.

The development has propelled massive selloff, especially for the liquid stocks like banks as investors are currently offloading their portfolio to invest in the fixed market. At the close of transactions yesterday, 28 stocks, made up of almost all the bank stocks recorded price depreciation while 17 others constituted the gainers chart.

Operators argued that the reason the banks suffer more is because that is where most investors keep at least 70 per cent of their stock market investmentS. Head Equity, Planet Capital, Dr. Paul Uzum, said the market has been largely bearish, with sell offs seen mainly in the liquid segment of the market, especially banking stocks. ”

GTCO which was doing N39 before the pronouncement is now N37 today (yesterday), which is just two trading days post the announcement. Zenith was N33+ and is now N30.85 today (yesterday).

“UBA has fallen from N22+ to N20 today. UBA traded as low as N19 today (yesterday) before making some recovery. Access equally dipped from N17 to N16.45 kobo. This selling pressure can also be seen in FCMB and Fidelity, which prices have suffered some haircut. “Other very liquid stocks in the market are equally affected.

Those, who are selling are trying to raise cash to invest in the money market. However, most less liquid stocks like Seplat, Airtel, Dangcem, Nestle, Presco, Total, Okomu Oil, Buacement and Buafood, have been stable.” Analysts at Vetiva Dealings and Brokerage said: “We are cautiously optimistic that we will see some bargain-hunting activity in the banking space in tomorrow’s (today) session; following the losses recorded across the sector this week. That said, we expect the market to trade in a mixed manner to the end of the week.”

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