Nigerian Stock Market Sentiment Turns Negative as CBN Holds Interest Rate at 27.5%

Lagos, Nigeria – The Nigerian Exchange (NGX) has slipped into bearish territory following the Central Bank of Nigeria’s (CBN) decision to maintain its Monetary Policy Rate (MPR) at 27.5%, extending the highest benchmark interest rate in nearly two decades. The move has triggered a flight to fixed-income securities, leaving equities undervalued.

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Market Reaction at a Glance

📉 NGX All-Share Index (ASI): Down 1.8% WoW (Worst weekly drop since May)
💸 Market Capitalization: Sheds ₦850 billion in 5 trading sessions
📊 Sectoral Impact: Banking (-3.1%), Consumer Goods (-2.4%) hardest hit

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Why the Negative Sentiment?

1️⃣ Fixed Income Appeal: Treasury bills & bonds now offer 19-25% yields, diverting funds from stocks
2️⃣ Corporate Earnings Pressure: High borrowing costs may squeeze profit margins for leveraged firms
3️⃣ Foreign Investor Caution: FX volatility persists despite rate hikes

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CBN’s Stance: Inflation Fight Continues

• MPR: Unchanged at 27.5% (11th consecutive hike)
• Cash Reserve Ratio (CRR): Retained at 45% for commercial banks
• Liquidity Ratio: Kept at 30%

Governor Olayemi Cardoso: “Price stability remains paramount—we’re seeing early signs of moderation in food inflation.”

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Investor Exodus in Numbers

➡️ Equity Outflows: Retail investors pull out ₦420 billion in June
➡️ Bond Demand: FGN savings bond subscriptions surge 47% MoM
➡️ Foreign Participation: Remains below 15% of market activity

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Analyst Views

✔ Tunde Abiodun (CSL Stockbrokers): “The NGX will underperform until Q3 earnings show resilience to high rates.”
✔ Nneka Onyeali-Ikpe (FBNQuest): “Dividend stocks like banks may rebound if H1 results beat expectations.”

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What’s Next for Investors?

🔍 Watch: Inflation data (CBN projects <30% by December)
📌 Opportunity: Undervalued blue-chips (Dangote Cement, MTN, Zenith) for long-term portfolios
⚠️ Risk: More rate hikes possible if inflation rebounds

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Market Snapshot

Metric	Current	Change
NGX ASI	98,342.51	-1.8% WoW
Top Loser	UBA	-7.2%
Dollar Volume	$28.1M/day	-22% MoM

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#NigerianStocks #CBNPolicy #InvestorAlert

*Editor’s Note: Dollar figures based on official I&E window rate of ₦1,488/$*

(Sources: NGX, CBN, CSL Research, FMDQ)