Nigerian Equities Market Defies Hawkish Rates Hike
Nigerian stock market, Wednesday, defied Central Bank’s aggressive rates hike, pulling a surprise profit against all expectations of market operators and analysts.
The benchmark All Share Index which measures the performance of equities traded on the floor of the Nigerian Exchange managed to eke out a meager 0.02 percent gain to close at 49,171.70 points, up from 49, 161.45 points on Tuesday.
The gains were largely driven by profits recorded by high cap BUACEMENT which gained +3.07 percent to close at N52 per share up from N50.45.
ARDOVA Plc further strengthened market gains with a 7.4 percent price appreciation to close at N13.75, up from N12.80 per share the previous day.
The total volume traded was 1.536 million valued at N21.226bn exchanged in 72 deals.
The gains recorded in these shares offset losses in Zenith Bank (-1.49%) and GTCO (-4.00%) as well as ACCESS CORP (-2.98%).
Consequently, market year-to-date (YTD) return rose to 15.11 percent just as market capitalization gained ₦12.47bn to close at ₦26.53trillion up from N26.51trillion recorded the previous session.
The market gain came a day after Nigeria’s central bank aggressively raised monetary policy rates (interest rate) in a radical effort to rein in ravaging inflation.
The CBN had, Tuesday, increased the interest rate by 150 basis points to 15.5 percent in an unprecedented move to fight the inflation rate currently at 20.52 percent as at end of August.
In an aggressive decision to mop up banking system liquidity, the apex bank also hiked the cash reserve ratio of banks to 32.5 percent up from 27.5 percent.
Market operators described the decisions as very aggressive and counterproductive, saying it would hamper economic growth and elicit a massive exit from the equities market to fixed income.
Surprisingly, the local bourse defied all expectations and posted modest gains, an outcome attributed to bargain hunting for high-yield equities trading at rock bottom prices including GTCO, Zenith, and others.
Analysis of today’s market activities showed trade turnover settled lower relative to the previous session, with the value of transactions decreasing by 25.36 percent.
A total of 101.57million shares valued at ₦1.20billion were exchanged in 3,981 deals. GTCO (-4.00%) led the volume and value charts with 14.34m units traded in deals worth ₦259.04million.
Market sentiments remained negative with losers outnumbering gainers. With a maximum -10 percent decline, JAPAULGOLD topped the list of 19 stocks on the losers table, while CHAMS (+8.00%) led six (6) others on the gainer’s table including BuaCement and ARDOVA.
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