Global Sell-Offs Indicate NGX Still Resilient Amid CBN Hikes

Kayode Tokede

As investors around the globe exit risk assets into safer classes, the Nigerian Exchange Limited’s All-Share Index’s 3.56per cent Year-to-Date return shows ultimate resilience amid consecutive interest rate hikes by the Central Bank of Nigeria (CBN).

Central banks in the United States of America, Europe, United Kingdom and Nigeria have bumped their overnight lending rates in bids to fight inflationary pressures on their respective economies.

Despite calls from fiscal authorities in the US, the Federal Reserve has stuck to its mandate announcing a further 750 basis point hike in Federal Funds rate, bringing it to four per cent this year, its highest since 2008.
Flagship indices like the S&P 500 and the NASDAQ 100 have purged trillions of dollars amidst the Fed’s interest rate hikes and quantitative tightening.

According to Countryeconomy, a tracker of global stock market indices, the S&P 500 has plunged by 21.12per cent YTD, whilst the NASDAQ 100 plummeted by 32.53per cent in the same period. The Dow Jones Industrial index has fallen by 11.53per cent from January, and the UK’s flagship index, the FTSE 100 lost 6.06per cent.
Meanwhile, the NGX ASI has managed a positive 3.56per cent YTD return despite three CBN’s Monetary Policy Rate (MPR) hikes between May and October, mostly on the back of strong earnings by listed companies.

According to the Foreign Portfolio Investment Report of the Exchange for the month of October, both domestic and foreign investor’s appetite for stocks have grown on a YoY basis. Domestic investors on the Exchange dealt N1.65trillion worth of equities on a YTD basis, rising from N1.05trillion done in the corresponding period of last year. Foreign investors on the hand exchanged N556.78billion worth of equities from N436.53billon in the same period of 2021.
With barely two months left in 2021, investors in the Nigerian equities market have their eyes set on the CBN’s next Monetary Policy Committee meeting. Industry watchers have said that despite the uncertainties on both the local and global stages, the NGX has weathered the storm far better than many of its counterparts in other regions. According to AfricanMarkets, the NGX ASI is one of seven continental indices still in positive region YTD among 17 indices tracked across 21 countries.