Despite persistent interest rate hikes by the Central Bank of Nigeria (CBN), the equities market defied expectations, concluding trading in May with investors gaining a marginal N619 billion.
This represents a sharp contrast to the previous month when the market declined by 6.16 percent, losing over N3.5 trillion in value. The decline followed a 200 basis point increase in the monetary policy rate (MPR) to 24.75 percent by the central bank, which led to a migration of assets to the fixed income market.
However, a combination of impressive earning reports for the first quarter to March 2024, Q1’24, and bits of bargain hunting activity kept the market in the positive region as investors managed to eke out marginal 1.1 percent returns despite the 150 basis points increase in interest rate to 26.25 percent during the month.
Notably, the Nigerian Exchange Limited, NGX, major indicator – the All Share Index, ASI, inched up to 99,300.38 points at the end of April from 98,225.63 points it started the month with, indicating a 1.1 percent increase.
Similarly, the market capitalization, which represents the value of the listed stocks, rose to N56.172 trillion from N55 553 trillion at the beginning of the month, also representing a 1.1 percent increase.
Investors in the banking and oil and gas sectors emerged the most beneficiaries of the upward trajectory as both indices moved higher by 2.98 percent and 2.1 percent respectively.
Meanwhile, investment analysts have said that the market would be mostly bearish in June owing to the elevated interest rate and increased activity in the primary market due to the banking sector recapitlisation.
