LAGOS, Nigeria (VOICE OF NAIJA)- Investors in the Nigerian stock market have faced significant losses, estimated at around N1.5 trillion, in the wake of substantial adjustments made during the recent Central Bank of Nigeria, CBN’s Monetary Policy Committee meeting.
This adjustment saw the Monetary Policy Rate (MPR) surge by an unprecedented 400 basis points, reaching a historic height of 22.75 percent from its previous level of 18.75 percent.
Following the announcement by CBN Governor Yemi Cardoso Wednesday where the new MPR was revealed, the market experienced a downturn, with investors witnessing a loss of N773 billion.
This decline has continued resulting in an additional loss of N720 billion.
The NGX market capitalization, representing the total value of investments on the Nigerian Exchange Limited, dropped to N54.317 trillion by the close of trading on Wednesday, down from N55.810 trillion recorded on Monday.
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Similarly, the NGX All Share Index (ASI) declined for two consecutive days, registering a decrease of 2.7 percent to close at 99,266.02 points on Wednesday, compared to 101,995.53 points on Monday.
Analysis of trading activities revealed a decrease in trade turnover relative to the previous session, with the value of transactions down by 4.8 percent.
A total of 396.23 million shares valued at N5.83 billion were exchanged in 10,549 deals.
The bearish trend in the market was attributed to selloffs in highly priced stocks and profit-taking in blue-chip companies, exerting pressure on the benchmark NGX All Share Index.
Analysts pointed out that the immediate reaction to the 4% increase in MPR contributed to this downturn.
Commenting on the situation, analysts at Investdata noted that the market’s response was not unexpected, particularly considering signals from the new CBN Governor since November 2023.
Additionally, the prolonged absence of a policy meeting, coupled with a nearly 28-year high inflation rate at 29.9 percent, and the Naira’s depreciation of almost 70 percent against the dollar in the New Year 2024, further exacerbated the market’s reaction.