Investors in the Nigerian equities market encountered a setback on February 29th, 2024, witnessing an estimated loss of approximately N650 billion.
The domestic bourse grappled with significant selling pressure as profit takings and a record-high monetary policy rate from the Central Bank intensified the selloffs.
The monetary policy committee of the Central Bank announced a policy rate hike to a record high of 22.7%, marking a notable increase from 18.75%.
The decision contributed to a decline of 1.16% in the local bourse, with the benchmark index settling at 99,980.30 points.
The NGX All-Share Index, which ended the day at 99,302.57 points, is noteworthy for being the first index to go below the 100,000-point mark in more than a month.
The current top of 105,722.78 points, which was achieved on Friday, February 16th, stands in stark contrast to the drop.
Analysts in the market believe that investors are taking advantage of the current slump to profit from a notable bullish rise that was recently witnessed.
The performance of the equity market was also impacted by investors’ attention shifting to fixed-income markets as a result of the recent policy rate hike.
Mr. Mike Eze, managing director of Crane Securities Limited, blames investors’ profit-taking and the spike in interest rates for the fall.
Mr. David Adonri, Executive Vice Chairman of Hicap Assets Limited, observes that investors typically switch to fixed-income assets when interest rates rise.
The market’s reaction to the policy rate hike suggests potential challenges for the equities market, with investors closely monitoring developments in both equity and fixed-income segments.