The equities market experienced a significant downturn in November, with investors losing N63 billion due to sustained monetary tightening by the Central Bank of Nigeria (CBN).
This sharp decline contrasts with the robust performance in October 2024, when the market recorded an unprecedented gain of N2.5 trillion, driven by strong corporate earnings and positive investor sentiment.
Market data revealed that the capitalisation of listed equities fell from N59.17 trillion at the end of October to N59.107 trillion by November’s close, while the All-Share Index (ASI) dropped by 144.36 points, representing a 0.14% decline from 97,651.23 to 97,506.87.
The Monetary Policy Committee (MPC) of the CBN raised the Monetary Policy Rate (MPR) by 25 basis points to 27.5% during its November 26 meeting. This marked a total increase of 875 basis points in 2024, up from 18.75% at the end of 2023.
The market reacted negatively to the rate hike, with a loss of N482 billion recorded the day after the announcement. The ASI dropped by 343.31 points, reflecting a 0.35% decline as cautious investors reevaluated their positions amid tightening monetary conditions.
Analysts at Cowry Asset Management attributed the downturn to a combination of profit-taking, sector rotation, and cautious market sentiment. They highlighted that macroeconomic uncertainties and investor skepticism about Nigeria’s economic direction contributed to the bearish trend.
Looking ahead, analysts expressed hope for a potential “Santa rally,” a seasonal market uptick typically seen in December due to increased liquidity and end-of-year optimism. However, they warned that persistent selling pressure and macroeconomic challenges might temper gains.
Cordros Capital noted that cautious trading is likely to persist due to the absence of significant positive catalysts, while Vetiva Dealings and Brokerage emphasized that investors would closely monitor macroeconomic data and the impact of the CBN’s rate decisions.
The interplay between rising inflation, monetary policy adjustments, and seasonal trends is expected to shape market performance in the final month of 2024.
