6 hours Ago By James Agberebi
The sustained monetary tightening triggered a significant capital shift in the equities market in November as investors lost N63 billion in the month. This is contrary to the N2.5 trillion gain and unprecedented rally witnessed in the market in October 2024.
The influx of impressive corporate earnings reports for the 2024 third quarter and nine months’ result of listed firms, in addition to the listing of Haldane McCall Plc’s 3.12 billion shares at N3.84 per share, could not lift the indices last month as investors reacted adopted a ‘wait and see’ stance.
Specifically, the market capitalisation of listed equities, which stood at N59.17 trillion on the last trading day in October, closed November at N59.107 trillion, shedding N63 billion while the all-share index, which measures the performance of listed equities lost 144.
36 points or 0.14 per cent from 97,651.23 to 97,506.
87. The Monetary Policy Committee (MPC) on November 26 raised the interest rate by 25 basis points to 27.5 per cent from 27.
25 per cent in September 2024. The MPC had raised the MPR by 875bps in 2024 from 18.75 per cent as of the end of 2023.
The stock market recorded close to N500 billion loss the day after the announcement of the rate hike, as market capitalisation dipped by N482 billion while the ASI shed 343.31 points, representing a decline of 0.35 per cent following investors negative sentiments on the interest rate hike.
Analysts at Cowry Asset Management Limited said investors are grappling with a mix of profit-taking, sector rotation and subdued optimism, causing the index to settle at 97,506.87 points last month, underscoring bearish sentiment. They pointed out that the downturn was driven by a complex interplay of reactions to newly published macroeconomic data and cautious interpretations of Nigeria’s evolving economic narrative.
“Looking ahead, we expect a mixed sentiment as the year draws to a close with the prospect of a Santa rally, a seasonal uptick driven by increased liquidity and end-of-year optimism lingering in the minds of market participants. “However, the technical picture remains clouded. The failed bullish hammer candlestick formation highlights lingering market weakness, while momentum indicators suggest a tentative recovery amidst persistent selling pressure.
“We think investors will likely navigate these conflicting signals, balancing opportunities for bargain hunting against broader macroeconomic concerns,” they said. They added that the interplay between rising inflation, monetary policy adjustments and seasonal trends will shape the market’s path as it enters the final month of 2024. Cordros Capital said: “The domestic bourse closed lower as the market reacted negatively to the MPC’s interest rate hike.
Next week (this week), we expect cautious trading to persist due to the absence of any significant positive catalyst to boost sentiments.” On what will shape the market in the next trading sessions, analysts at Vetiva Dealings and Brokerage said: “We anticipate a cautious start to the week, as investors digest the latest macroeconomic data and interest rate decision from the CBN.”.
