- The Nigerian Exchange Limited (NGX) ended the week with a decline as the market reacted to the Central Bank's latest interest rate hike
- Major stocks like Seplat, GTCO, and MTN Nigeria experienced losses, while WAPCO, Oando, and FBNH posted gains despite the broader market downturn
- Analysts predicted cautious trading in the coming week, with profit-taking and portfolio rebalancing amid the ongoing effects of the interest rate hike
The Nigerian Exchange Limited (NGX) ended last week on a negative note, reflecting the stock market's response to the Central Bank of Nigeria's (CBN) recent interest rate increase.
On the heels of the Monetary Policy Committee (MPC) decision, the CBN raised its benchmark interest rate, the Monetary Policy Rate (MPR), by 25 basis points to 27.5%, up from 27.25%. This marked the sixth consecutive rate hike of the year, bringing the total increase to 875 basis points, compared to 225 basis points in 2023.
In line with the rate hike, the NGX All-Share Index (ASI) dropped by 0.3% Week on Week (W/W), closing at 97,507.87 points, down from 97,829.02 points the previous week.
The decline was largely driven by significant sell-offs in major stocks. Seplat, for example, fell by 6.0%, GTCO by 3.0%, and MTN Nigeria by 1.2%. On the other hand, WAPCO, Oando, and FBNH saw gains of 7.4%, 6.7%, and 3.5%, respectively.
Despite the overall decline, market activity during the week remained robust. Both trading volume and value increased by 63.6% and 52.8% W/W, respectively. Sectoral performance was mixed, with the Oil & Gas sector down by 1.9%, the Consumer Goods Index declining by 0.4%, and the Banking Index dipping by 0.3%. In contrast, the Insurance Index appreciated by 1.2%, and the Industrial Goods Index gained 0.8%.
Month on Month (MoM), the market showed a marginal drop of 0.1%, with investors losing N64 billion in market capitalisation, which ended the week at N59.207 trillion, down from N59.271 trillion at the end of October 2024.
On a Year-to-Date (YtD) basis, the market remains positive, posting a 30.4% gain.
Looking ahead, analysts at Cordros Research have stated that cautious trading is expected to persist in the coming week, noting the absence of any significant positive catalysts to drive market sentiment.
Similarly, analysts at InvestData Consulting Limited suggested that mixed sentiments are likely to continue, as investors react to the recent interest rate hike, with a combination of profit-taking, bargain hunting, and portfolio rebalancing amid low valuations.
The market outlook remains uncertain, with investors carefully navigating the impacts of the latest monetary policy decisions.
CBN, SEC sanction 10 banks for forex violations
Meanwhile, TheRadar reported that the regulatory agencies responsible for overseeing the activities of deposit money banks in Nigeria sanctioned 10 banks for violations of foreign exchange guidelines and other regulatory offences.
These agencies, including the Central Bank of Nigeria and the Securities and Exchange Commission, imposed fines totalling N1.502 billion as penalties within the first six months of 2024.
