HomeECONOMYStock Market Plunges as Inflation Woes Persist

Stock Market Plunges as Inflation Woes Persist


By Fasuyi Tolulope

WhatsApp Image 2024 05 16 at 1.03.11 PM

The Nigerian Exchange (NGX) Limited experienced another challenging day for stock investors as the market fell by 0.13 per cent on Wednesday, driven by mounting inflationary pressures.

The midweek decline at Customs Street was attributed to selling pressure following the release of new inflation data. The National Bureau of Statistics (NBS) reported that the average prices of goods and services surged by 33.69 per cent in April 2024, up from 33.20 per cent in March 2024.

This significant rise in inflation was primarily due to an increase in food prices, pushing food inflation to 40.53 per cent during the period under review.

With the Central Bank of Nigeria (CBN) expected to tighten monetary policies further in response to these inflation figures, investor sentiment turned bearish. CBN Governor Mr. Yemi Cardoso recently indicated that borrowing costs would remain high until inflation rates stabilize.

On Wednesday, the inflation report prompted traders to continue profit-taking activities, resulting in the All-Share Index (ASI) dropping by 130.56 points to close at 97,343.42 points, down from 97,473.98 points. Concurrently, the market capitalisation fell by N74 billion, ending at N55.058 trillion compared to N55.132 trillion previously.

Investor sentiment was notably poor, with the market closing with 30 losers and only 13 gainers, reflecting a negative market breadth index.

Leading the decliners, FTN Cocoa and PZ Cussons both dropped by 10.00 per cent, closing at N1.44 and N20.25 respectively. Sterling Holdings decreased by 9.89 per cent to N4.01, The Initiates fell by 9.78 per cent to N2.03, and UAC Nigeria slipped by 9.76 per cent to N13.40.

On the flip side, Custodian Investment rose by 9.63 per cent to N10.25, International Energy Insurance gained 9.29 per cent to close at N1.53, Sovereign Trust Insurance increased by 7.89 per cent to 41 Kobo, NPF Microfinance Bank went up by 7.10 per cent to N1.96, and Champion Breweries climbed by 6.11 per cent to N3.30.

The heightened panic selling resulted in a 15.98 per cent rise in trading volume and a 22.41 per cent increase in trading value, although the number of deals decreased by 7.77 per cent. Specifically, investors traded 355.6 million shares worth N7.1 billion in 7,333 transactions, compared to 306.6 million shares valued at N5.8 billion across 7,951 deals on Tuesday.

GTCO led the activity chart with 71.9 million shares traded, valued at N3.0 billion. Custodian Investors followed with 65.5 million shares worth N785.3 million, Access Holdings exchanged 24.2 million shares for N416.7 million, Tantalizers traded 21.3 million shares worth N12.4 million, and Prestige Assurance moved 17.5 million shares valued at N9.0 million.

As the market continues to react to inflationary pressures and anticipated monetary policy changes, investors remain cautious, closely monitoring economic indicators and their potential impact on market performance.


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