Stock Market Depreciates by N241bn Amid Global Recession Fears

Kayode Tokede

The stock market of the Nigerian Exchange Limited (NGX) depreciated last week following global market decline performance as recession fear return and Central Bank of Nigeria (CBN) hike in Monetary Policy Rate (MPR).

Global stocks nose-dived, government bond prices plummeted, the pound dipped against the dollar, oil prices slumped and cryptocurrencies wobbled as investors, already worried about rising interest rates and stubbornly high inflation, started quaking at the growing likelihood of a recession.

The World Bank in a comprehensive new study stated that as central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging market and developing economies that would do them lasting harm,

On the domestic economy, investors are worried that the CBN might increase its Monetary Policy Rate (MPR) by at least 50basis points as its 287th meeting of the Monetary Policy Committee (MPC) is scheduled for Monday.

Findings on the NGX revealed that investors booked profits on bellwether stocks that led to market capitalisation dropping by N241billion to N26.445trillion it closed for trading last week from N26.686 trillion the stock market opened for trading.

Consequently, the NGX All-Share index shed 0.9per cent or -448.80 basis points to close at 49,026.62 basis points from 49,026.62 basis points.

The downturn was impacted by losses in BUA Cement that dropped by 10.4per cent as Totalenergies Marketing Nigeria Plc declined by 10 per cent. Guinness Nigeria down by 5.6 per cent as Guaranty Trust Holding also shed 5.6 per cent.

Consequently, the stock market in its Month-till-Date (MtD) loss increased to -1.6per cent, while the Year-till-Date (YtD) gain moderated to +14.8per cent.

Sectoral performance was broadly negative following losses in the Oil & Gas (-4.7per cent), Industrial Goods (-3.9 per cent), Insurance (-2.1 per cent), and Consumer Goods (-0.2per cent) indices. The Banking (+2.1 per cent) index was the sole gainer of the week.

Analysts at Cordros Research said, “In the week ahead, we believe investors will be focused on the outcome of the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the fixed income market.

“As a result, we envisage an extension of the cautious trading theme, especially from domestic investors.

“Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”