Investors on NGX lose N3.57trn on sustained stock sell off in pursuit of higher yields from fixed income markets

Thursday, 02 May 2024 04:39

Investors on NGX lose N3.57trn on sustained stock sell off in pursuit of higher yields from fixed income markets

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Investors on NGX lose N3.57trn on sustained stock sell off in pursuit of higher yields from fixed income markets

In April, the NGX All-Share Index witnessed a significant downturn, shedding N3.57 trillion in market value.

This marks the first monthly decline for the NGX this year, following substantial gains of 17.7%, 12.47%, and 5.64% in January, February, and March respectively.

Nonetheless, the NGX maintains a year-to-date increase of 31.36%.

The decline in the index was primarily driven by policy announcements from the Central Bank of Nigeria (CBN), particularly the proposed recapitalization plan for commercial banks, aiming to raise approximately N4 trillion in fresh capital over the next two years.

Additionally, the CBN's substantial rate hike triggered intensified sell-offs, resulting in a 6% decrease in the local bourse, with the benchmark index concluding at 98,225.63 points.

The surge in rates diverted trillions of naira from the stock market to the fixed income market, as investors pursued higher yields.

The NGX All-Share Index closed below the 100,000-point mark, ending the month at 98,225.63 points, a notable contrast to its peak of 104,562.06 points at the end of March 2024.