Business News

Equity investors lose N700 billion, a day after MPC interest rate hike

Nigeria’s stock market, the Nigerian Exchange Group (NGX), experienced a significant sell-off on Wednesday, with investors witnessing a 1.27% decline in the benchmark All-Share Index.

This downturn followed a 1.39% loss recorded on Tuesday, intensifying the bearish trend that began on Monday.

The sell-offs were exacerbated by the announcement from the monetary policy committee of the Central Bank, which raised the monetary policy rate to a record high of 22.7%, up from 18.75%.

This decision affected market sentiments profoundly, leading to widespread losses across the board.

Except for the oil and gas index, all other major indexes recorded losses, reflecting the broad impact of the hawkish policy rates on market dynamics.

Investors, speaking to Naijaonpoint, highlighted that the increased policy rates present significant challenges for equity markets, contributing directly to the observed sell-offs.

The NGX All-Share Index dipped below the 100,000 points mark for the first time in over a month, ending the day at 99,302.57.

The decision by the Central Bank’s monetary policy committee to increase the benchmark Monetary Policy Rate (MPR) significantly impacts the financial markets.

This recent market activity also highlights the delicate balance central banks must maintain between controlling inflation and supporting economic growth.

As investors adjust their strategies in response to these policy changes, the impact on different sectors of the economy will continue to unfold, offering valuable insights into the interplay between monetary policy and financial market dynamics.

Meanwhile, despite the bearish trends, Nigeria’s stock market still trades at a price-to-earnings ratio of 14.49x compared to Frontier Markets’ 11.45x. South Africa, Ghana, and Egypt all trade at 15.76x, 3.67x, and 14.28x respectively.