Investors in the Nigerian stock market experienced significant losses amounting to approximately N1.5 trillion as a result of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) decision to increase the Monetary Policy Rate (MPR) at its recent meeting.
The MPC meeting saw an unprecedented 400 basis points hike in the MPR, raising it to a record high of 22.75 percent from its previous level of 18.75 percent.
The impact on the Nigerian Exchange Limited (NGX) market capitalization was notable, with the total value of investments dropping to N54.317 trillion at the close of trading on Wednesday, down from N55.810 trillion recorded on Monday.
Following the announcement of the new MPR by CBN Governor Yemi Cardoso on Tuesday, the stock market experienced a significant decline, with investors losing N773 billion. This downward trend continued on Wednesday, with further losses amounting to N720 billion.
The NGX All Share Index (ASI), another key indicator of market performance, also witnessed a decline for two consecutive days, falling by 2.7 percent to close at 99,266.02 points on Wednesday, compared to 101,995.53 points on Monday. Trading analysis revealed that the NGX ASI declined by 1.4 percent on Tuesday and another 1.3 percent on Wednesday.
Market activities showed 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.
Analysts attributed the bearish trend to selloffs in highly priced stocks and profit-taking in blue-chip companies, which weighed on the benchmark NGX All Share index following the 4 percent increase in MPR.
Commenting on the situation, analysts at Investdata noted that the decision was not unexpected, as Governor Cardoso had signaled the possibility of such a move since November 2023. The persistently high inflation rate, nearing a 28-year high at 29.9 percent, along with significant Naira depreciation against the dollar, further influenced the market sentiment.
