Nigerian equities market sees loss of N650 billion in February amid profit takings, rate hike 

The selloffs were further intensified 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%, marking an increase from 18.75%. 

Resultantly, the local bourse experienced a decline of 1.16%, culminating in the benchmark index settling at 99,980.30 points.  

Notably, the NGX All-Share Index dropped below the 100,000 points thresholds for the first time in over a month, concluding the day at 99,302.57 points.  

This decline contrasted sharply with its peak position of 105,722.78 points recorded on Friday, February 16th. 

Market analysts attribute this downturn to investors capitalizing on profits following a significant bullish rally observed in recent times.  

Moreover, the recent policy rate hike has prompted investors to shift their focus towards fixed-income markets, further impacting equity market performance. 

Consequently, available statistics from Naijaonpoint show that the All-Share Index, the broad index measuring the performance of Nigerian stocks, opened the trading month at 101,154.46 index points on February 1, 2024, and closed at 99,980.30 points at the end of the month on February 29. This represents a loss of 1,174.16 basis points or 1.16%. 

Further analysis reveals that activities on the Nigerian Exchange Limited (NGX), which opened the trading month with a market capitalization of N55.357 trillion, closed the month at N54.707 trillion, resulting in a month-to-date loss of about N650 billion. 

The Managing Director, of Crane Securities Limited, Mr. Mike Eze in a chat with Naijaonpoint attributed this downturn to investors capitalizing on profits following a notable bullish rally observed in recent times and also the monetary policy rate hike of 22.7% from 18.75%. 

He said with the further hike, investors will navigate towards the fixed income space because there is no sentiment when it comes to investment. 

Eze noted that the market is information and with the current announcement on the rate hike, there will be a further run on the stock market because investors are going to move to the fixed-income segment in order to reap high returns on their investments. 

Executive Vice Chairman, of Hicap Securities Limited, Mr. David Adonri also in a chat with Naijaonpoint said when interest rates rise, investors tend to migrate to fixed-income securities. 

He noted that the recent hike will have a negative impact on the market especially on the equity side that just started recovering.