NGX Dips Amid Interest Rate Hike, Banking Stocks Lead Losses
The Nigerian Exchange (NGX) experienced a significant downturn during early trading hours as stockholders offloaded banking shares following the Central Bank of Nigeria’s (CBN) recent interest rate hike to 27.50%.
Market analysts attribute the selloff to a shift by investors towards the fixed income market, where rising yields are seen as more attractive than equities amid the monetary tightening.
“Investors are rebalancing their portfolios to manage risks and capitalise on higher yields in the fixed income market,” Alpha Morgan Capital Limited said in a midday report. The NGX All Share Index reflected the bearish sentiment with a 0.37% loss by midday.
Banking Sector Takes the Biggest Hit
Tier-1 banking stocks bore the brunt of the selloff, with notable losses recorded across major players. FCMB led the decline, shedding 2.70% of its market value during intraday trading. Guaranty Trust Holding Company (GTCO) saw its stock drop by 0.94%, with analysts citing service disruptions as a trigger for negative investor sentiment.
Similarly, UBA also lost 0.94% of its market value, while Access Holdings (ACCESSCORP) dipped 0.22%. These movements reflected heightened selling pressure on mid- to high-capitalisation stocks.
“Banking stocks have become primary targets for cash conversion as investors reposition in response to the interest rate hike,” explained one stockbroker.
Wider Market Impact
The market’s bearish momentum extended beyond the banking sector. ARADEL, an energy stock, emerged as a major loser with a 9.49% drop in value during the session, reflecting broader investor caution.
Analysts anticipate the market may close in negative territory unless a late-session rally materialises. The selloff highlights the fragility of investor confidence amid changing monetary policy dynamics.
Naira’s Continued Decline Adds Pressure
Compounding market concerns, the naira continued its slide, plummeting to N1690/$ following the Central Bank’s pricing of the spot exchange rate. The currency’s depreciation has added another layer of complexity to the investment landscape, prompting some investors to adopt a wait-and-see approach.
Outlook
Market analysts suggest the current trend could persist as investors continue to weigh the implications of the interest rate hike on equities and fixed income assets. While the banking sector remains a focal point, broader market activity may see further repricing as the monetary policy adjustment takes hold. OGUNCCIMA Applauds Dangote Refinery’s Economic Revolution
