Stock market investors on the floor of the Nigerian Exchange Limited lost N3.28tn of their investment between August 1 and October 31, 2022.
The trading activities, which began with a market capitalisation of N27.163tn in August to close at N23.88tn as of October 31, 2022, shed a 12.09 per cent or N3.28tn in the three months under review.
The breakdown revealed that the stock market in October depreciated by N2.57tn as investors’ aggressive profit-taking in Airtel Africa and Dangote Cement Plc impacted the overall market capitalisation and in September, the market depreciated by N430bn.
The market lost about N283bn in August
Consequently, the NSE All Share Index, which tracks the general market movement of all listed stocks, shed 12.24 per cent to close on October 31, 2022 at 49,024.16 basis points from 49, 950.32 basis points on August 1, 2022.
Further findings revealed that the stock price of Airtel Africa in three months has depreciated by N630.40 or 33.08 per cent to N1,275.00 per share, from N1,905.40 per share in August, while Dangote Cement stock price dropped to N220.50 per share in October, representing a decline of 16.8 per cent or N44.5 from N265 per share in August.
A capital market analyst, who spoke with The Punch on the bearish performance within the period under review, stated that the capital market would not operate in isolation.
While speaking with The Punch in an interview, the President of PEARL Awards, Mr Tayo Orekoya, said the major factor contributing to the recent depreciation was the incessant increase in the benchmark interest rates.
According to him, “One major factor that has contributed to losses is the increase in the Monetary Policy Rate. The rates by the central bank were increased in May. It was 13 per cent by July 2014. By September, talked about 15.5 per cent.
“Naturally, you will see that investors would want to withdraw from equities markets to fixed income-yielding investments because there is a moderate risk on the fixed income investments. Of course, as much as the MPR keeps going up, then you would expect that investors will move and that accounts for the loss in the equities market, in favor of the fixed income market.”