Equities’ Investors Lose N1.5trn On Interest Rate Hikes In Q3

The Nigerian equities market lost N1.484 trillion in third quarter (Q3) as investors’ sentiment toward the market continued to diminish on interest rate hikes.

During the period, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) voted to increase the Monetary Policy Rate (MPR) by 150bps to 15.5 per cent, the third consecutive rate hike and the highest since the MPC replaced the Minimum Rediscount Rates (MRR) with MPR in 2006. In addition, the Committee also voted to increase the Cash Reserve Requirement (CRR) to a minimum of 32.5 per cent while retaining the asymmetric corridor around the MPR and liquidity ratio at +100bps/-700bps and 30.0 per cent, respectively.

It will be recalled that the local bourse was in positive momentum from the prior year in the first half (H1) of 2022 with a return of 21.3 per cent. From a quarterly perspective, the market mood was bullish in the two quarters with Q1 returning 10.3 per cent higher than 9.9 per cent in Q2. However, as the market entered Q3 with the MPR hike, investors has continued to take advantage of the rising yield environment in the fixed income space.

The NSE All Share Index, which tracks the general market movement of all listed equities shed 5.39 per cent to close Q3 on September 30, 2022 at 49,024.16 basis points from 51,817.59 points at which it opened trading on July 1, 2022. Similarly, market capitalisation, the total market value of listed companies’ outstanding shares lost N1.484 trillion, closing lower at N26.451 trillion, compared to the opening value of N27.935 trillion on July 1, 2022.