Nigerian Stocks Drop By 1.63% In September, First Time Since 2019

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The Nigerian All Share Index dropped by 1.63% to close trading at 49,024.16 points on September 30, 2022, first time since 2019.

The equities market has also sustained a bearish profile for four consecutive months since June this year.

The build-up to the 2023 election has kept foreign investors at bay and sell-offs by domestic investors deepen.

Also, the decision of the Central Bank of Nigeria (CBN) to increase the interest rate to 15.5% has also further depressed investors’ appetite for equities to embrace money market instruments.

Nigerian Stocks Drop By 1.63% In September, First Time Since 2019

The ASI rose to as high as 54.085.30 on May 27 2022 but has since in the past four months dropped by 5,061 basis points or 9.55%.

Statistics obtained by newsmen showed that activities on the Nigerian Exchange, which opened the month at N26.880 trillion in market capitalization and 49.836.51 in the index at the beginning of trading on September 1, 2022, closed on September 30, 2022, at N26.451 trillion and 49,024.16 index points, hence has earned a month to date loss of about N429 billion or 1.63%.

Further analysis showed that the NGX Insurance Index got the hardest hit in terms of decline in percentage in September, dropping by 6.45 percent to 168.60 points from 180.23 points it opened for trading during the month.

The Oil & Gas Index followed with a decline of 4.48 percent to 508.26 points from 532.15 points it opened for trading in September.

Pre-election years are usually characterized by negative sentiments, which also result in the exit of foreign investors.

The build-up to the 2023 general election has started impacting the market negatively. Frightened foreign and domestic investors are exiting the market, which is sparking up a liquidity crisis.

Market experts believe that domestic Investors’ sentiment is usually weak as they seek to reduce their market exposure when elections draw closer. The intensity of the impact is usually a function of the degree of political tension and uncertainty generated by political activities.

The Central Bank during its last MPC meeting had increased the interest rate from 11.5% to 14% in the last two meetings, however with the inflation rate still spiking above 20%, the CBN has raised the rate further to 15.5% in a bid to combat the rising cost of goods and services.

Source: Nairametrics