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Stock market declines further by N773bn on MPR hike

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Transactions on the stock market closed negative on Tuesday for the second day, depreciating further by 1.38 percent in reaction to the outcome of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN).

Recall that CBN, at the bi-monthly MPC meeting, raised the benchmark lending rate by 400 basis points to 22.75 percent, from 18.75 percent to stem inflation.

The MPC meeting was the first under Mr Olayemi Cardoso, CBN Governor, since he came on board in September 2023.

Consequently, the All-Share Index (ASI), which dropped by 1.38 percent or 1, 412.64 points, closed at 100,582.89 points, compared to 101,995.53 posted on Monday.

The market capitalisation also shed N773 billion or 1.38 percent to close at N55.037 trillion, compared to N55.810 trillion recorded in the previous session.

As a result the Year-To-Date return fell to 34.52 percent.

The market losses were driven by selloffs in MTN Nigeria, FBN Holdings and Guaranty Trust Holding Company (GTCO), among others.

Meanwhile, a total of 280.46 million shares valued at N6.12 billion were exchanged in 9,141 deals, as against 294.32 million shares valued at N6.72 billion, exchanged in 9,957 deals posted previously.

Also, analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 8.96 per cent.

Reacting, Vice Chairman, Highcap Securities Ltd., David Adonri said that investment in the capital market is vulnerable to changes in the monetary policy.

Adonri, in an interview with journalists in Lagos, explained that the drop in the performance of the market was due to further tightening of the monetary policy by CBN.

He stated that the decision of the CBN MPC means that the interest rate would increase severely.

“If the interest rate rises excessively, the impact on equities is that it will migrate financial assets from equity to debt.

“That was the reaction in the market today,” he said.

On the losers’ table, FBN Holdings and Multiverse Mining and Exploration Plc led in percentage terms of 10 each to close at N30. 60 and N15.30 per share, respectively.

MTN followed with a loss of 9.94 percent to close at N222.90, McNichols Plc shed 9.79 percent to close at N1.29, while Consolidated Hallmark Insurance went down by 9.63 percent to close at N1.22 per share.

On the other hand, Africa Prudential Plc and Omatek Venture led the gainers’ table in percentage terms of 9.86 each to close at N7.80 and 78k per share, respectively.

Juli Plc also gained 9.73 percent to close at N2.82, Tantalizers garnered 8.11 percent to close at 40k, while Ellah Lakes Plc rose by 8.07 percent to close at N3.08 per share.

On the activity table, Transcorp led in volume with 44.41 million shares at the value of N583.52, Access Corporation followed with sales of 30.56 million shares worth N600.55 million.

Also, the United Bank of Africa(UBA) traded 26.51 million shares valued at N611.20 million, Zenith Bank sold 24.96 million shares worth N874.63 million.

The National Salt Company of Nigeria traded 13.80 million shares worth N893.68 million to lead the chart in value.

Meanwhile, market breadth is closed negative with 24 laggards and nine gainers on the equity market.

Money market

Naira will continue to appreciate against dollar – Shettima

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Vice President Kashim Shettima has expressed optimism that the Naira would continue to appreciate against the dollar at the forex market.

Spokesperson of the Vice-President, Mr Stanley Nkwocha, in a statement on Saturday, said Shettima stated this at a meeting with officials of the Lagos Chamber of Commerce and Industry (LCCI), at the President Villa, Abuja.

He said President Bola Tinubu ended the fuel subsidy and ensured the unification of the multiple exchange rate because the former arrangement was producing billionaires overnight.

“Naira went haywire and some people were celebrating but inwardly we were laughing at them because we knew that we have the leadership to reverse the trend.

“Asiwaju knows the game, and truly the Naira is gaining and the difference will drop further.”

He recalled that the quality of leadership provided by President Tinubu as governor of Lagos laid the foundation for the massive development witnessed in the state.

Shettima assured that the Tinubu administration is doing its best to address challenges in the power sector.

According to him, Tinubu’s administration is aware that power is absolutely essential for development.

“We are determined to ensure that we generate jobs for our youths. Honestly, the President’s obsession is to live in a place of glory, to transform this country to a higher pedestal.

“He wants to leave a legacy, one of qualitative leadership because the hope of the black man, the hope of Africa rests with Nigeria.

“I want to assure you that President Bola Ahmed Tinubu is one of you. He understands your ecosystem. In this government, you have an ally and a friend.”

Earlier, the President of LCCI, Gabriel Idahosa, emphasised the need for the Federal Government to consider more innovations to address the insecurity challenge in the country.

He also urged the Tinubu administration to ensure a significant upswing in the pace and scale of alternative policy measures that promote credit access, stimulate investment, and support entrepreneurship.

“This could include targeted interventions such as concessional lending facilities, loan guarantees, and interest rate subsidies tailored to the needs of SMEs and key sectors of the economy like agriculture, manufacturing and power technology.”

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LCCI advocates discipline, export to sustain Naira appreciation

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LCCI advocates discipline, export to sustain Naira appreciationThe Lagos Chamber of Commerce and Industry (LCCI) has emphasised the importance of maintaining discipline in the foreign exchange market to sustain the steady appreciation of the Naira.

The President and Chairman of the Council of LCCI, Mr Gabriel Idahosa, made the call in an interview with newsmen on Wednesday in Lagos.

Idahosa praised the efforts of the Central Bank of Nigeria in imposing discipline, attributing the recent Naira appreciation to curbing speculative activities.

“On the monetary side, the CBN is doing it. The primary efforts should continue to impose discipline in the foreign currency market.

“The abuses in the foreign currency market were prevalent and most of the fall in the value of the Naira in the last six months is not because there was any sudden calamity in the Nigerian economy.

“It was primarily because of very reckless speculations, that people were just speculating in the dollar, they had nothing to export, nothing to import, they were just buying the dollar for speculative reasons.

“And once the Central Bank started to impose discipline in the foreign currency market, we saw the value of the Naira rising very quickly by stopping speculation,” he said.

According to him, the strategies of the Central Bank, now, are designed to achieve a sustained discipline in the foreign currency market.

Idahosa highlighted the need to continue reducing the number of Bureau de Change operators, stressing that many operated without contributing to international trade.

He applauded the Central Bank’s move to enforce documentation and identification of buyers and sellers at BDCs, aiming to deter reckless speculation and curb illicit financial flows.

On the fiscal side, Idahosa urged President Bola Tinubu to prioritise a nationwide export drive, citing it as the key to bolstering the Naira and providing essential foreign exchange.

He emphasised the importance of fostering a culture of export among Nigerians across all scales of enterprise to reduce reliance on imports and strengthen the country’s economic resilience.

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Money market

Foreign reserves decline to $32.29bn

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The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.

This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.

The country’s foreign reserves declined by 6.2 percent, losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.

At the beginning of the month, the reserve was at $33.57 billion, then further dipped to $32.6 billion by April 12.

This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.

It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.

The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.

Also, last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books.

Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.

He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.

“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.

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