MPC: Stock investors maintain cautious stance, lose N290bn

There may be no respite yet for investors in the stock market as investment analysts have said that the outcome of the last Monetary Policy Committee (MPC), meeting will continue to drive asset reallocation from equities.

Although the market started the week on a positive note, negative sentiments resurfaced later in the week as investors reacted to the MPC’s decision to further hike the Monetary Policy Rate, MPR, by 150bps to 26.25 percent in response to rising inflation.

The sell-off that followed the decision resulted in loss of N290 billion from investors’ wealth even as the banking stocks bore the brunt of the sell-off. Consequently, the All Share Index, ASI, fell by 0.52 percent to close at 97,612.51 points.

The negative sentiment was driven by losses in United Bank for Africa, UBA, (-12.1%), FBN Holdings Plc (-10.9%) and Zenith Bank Plc (-8.5%).

The market capitalisation also depreciated by the same margin to N55.218 trillion from N55.508 trillion, representing a 0.52 percent decline. Sectoral performance was mixed, with losses in the banking (-7.3%) and insurance (-3.5%) sectors, while the oil & gas (+0.7%), consumer goods (+0.3%), and the industrial goods (+0.2%) sectors recorded gains.

On activity levels, the traded volume increased by 20.2 percent to 1.986 billion, while the traded value decreased by 4.6 percent to N 40.715 billion.

The financial services industry, measured by volume, led the activity chart with 1.577 billion shares valued at N30.359 billion traded in 20,697 deals; thus contributing 79.41 percent and 74.56 percent to the total equity turnover volume and value respectively.

The conglomerates sector followed with 125.342 million shares worth N1.387 billion in 2,283 deals, while the consumer goods sector with a turnover of 77.327 million shares worth N2.446 billion in 4,916 deals placed third.

Trading in the top three equities namely Ecobank Transnational Incorporated Plc, Access Holdings Plc and UBA Plc, measured by volume, accounted for 1.006 billion shares worth N20.115 billion in 6,849 deals, contributing 50.67 percent and 49.40 percent to the total equity turnover volume and value respectively.

Commenting, analysts at Cordros Capital said: “Given the outcome of the MPC meeting, we believe the hawkish tone will continue to intensify risk-off sentiments in the domestic bourse.

“Thus, we anticipate cautious trading in the near term.”