Market News

The fear is heightened by the latest FGN Bonds that opened on juicier rates for long-tenored bonds.

By Ronald Adamolekun

Nigerian stocks fell further Friday amidst sustained profit-taking due to the fear of an adjustment of the policy rate by the Monetary Policy Committee. The All-Share Index fell 0.24 per cent or 97.16 points, to close at 41,001.99. Market capitalisation stood at N21.448 trillion after losing N51 billion. The MPC of the Central Bank of Nigeria’s first meeting of the year is slated for Monday and Tuesday.

Ambrose Omordion, the Chief Operating Officer of InvestData Ltd., attributed the bearish trend to fear of likely rate cut by MPC. Usually, rising interest rates cause businesses and consumers to cut spending, resulting in lower company earnings, and expectedly, a fall in stock prices. The reverse is also true.

“Historically, February is a dicey month for the stock market, despite being the period for early filers of full year earnings reports,” Mr Omorodion said. “The recent slow or profit booking is as a result of positive close of 2020 and fear of rate adjustment at the forthcoming MPC meeting, ahead of earnings reporting season,” Mr Omordion said.

He said the fear was heightened by the latest FGN Bonds that reopened on adjusted and juicier rates for long-tenored bonds.

Mr Omordion noted that the relative stability in the market was due to the dominance of domestic institutional investors.

An analysis of the price movement chart indicates that 32 stocks recorded price depreciation, relative to 21 gainers.

Lafarge Africa topped the laggards’ table, dropping N1.95 kobo to close at N26 per share.

MRS trailed with N1.20 kobo to close at N11.20 kobo, while Livestock Feeds dipped 28k to close at N2.52 per share.

NEM Insurance lost 26k to close at N2.43, while United Bank for Africa dipped 25k to close at N8.70 per share