Stock Market Performance Deflated By CBN’s Interest Rate Hike

The stock market’s negative reaction to the Central Bank of Nigeria’s (CBN) recent interest rate hike caused the Nigerian Exchange Limited, or NGX, to close lower last week.

The benchmark interest rate, known as the Monetary Policy Rate, or MPR, was raised by 25 basis points to 27.5 from 27.25% last week by the apex bank’s Monetary Policy Committee, or MPC.

This is the sixth straight rate increase this year, raising the total rate increase from 225 basis points in 2023 to 875 basis points this year.

The primary performance indicator, the NGX All-Share Index (ASI), decreased by 0.3% week over week, W/W, to close at 97,507.87 points from 97, 829.02 points the week before, reflecting the impact of the stock market’s MPC decision.

While WAPCO gained 7.4%, Oando 6.7%, and FBNH 3.5%, the market was severely impacted by sell pressures on Seplat, which had a 6.0% fall, GTCO 3.0%, and MTN Nigeria 1.2%.

The week under review saw strong market activity, with trading volume and value increasing by 63.6% W/W and 52.8% W/W, respectively. While the Insurance Index increased by 1.2% and the Industrial Goods Index by 0.8%, sectoral performance was uneven, with the Oil & Gas Index down 1.9%, the Consumer Goods Index by 0.4%, and the Banking Index by 0.30 percent.

In the meantime, month-over-month research revealed that investors lost N64 billion in market capitalization and the market fell by 0.1%, meaning that the entire value of investments on the Exchange closed Friday at N59.207 trillion, down from N59.271 trillion at the end of October, 2024