The selling pressure witnessed on the shares of Geregu Power Plc during the week trading session on the NGX resulted in shareholders losing about N30.250 billion.
Checks by showed that the energy firm’s stock price dropped by 9.85 per cent to N110.70 per share from N122.80 with which it opened the trading session yesterday.
Further analysis showed Geregu closed the trading day with N276.750 billion in market capitalisation, as against N307.000 billion at the beginning of trading.
The drop in Geregu’s share price was due to investors’ negative sentiment which triggered sell-offs. This comes amid a build-up to the 2023 general election and a recent interest rate hike by the Central Bank of Nigeria.
Market operators earlier told journalists that the decision of the CBN to increase the interest rate by 16.5 per cent could hurt the equities market by prompting investors to navigate towards fixed-income space.
The relentless sale pressure (particularly by Foreign Portfolio Investors (FPIs)) is coming on the back of high commodity inflation caused by the Russia-Ukraine war, which has led to a spike in interest rates and, in turn, led to a jump in bond yields.
Foreign institutional investors invest in Nigerian stocks or other emerging markets when they have excess liquidity (low borrowing costs). However, if bond yields rise in the US, money will move away from emerging markets.