…MPC retains MPR at 13.5%***
The upward trend recorded by the Nigerian Stock Exchange (NSE) for some days now was halted on Tuesday as the market capitalisation which opened at N13.049 trillion sheds N74 billion to close at N12.975 trillion.
The All-Share Index dipped 152.45 points or 0.56 per cent to close at 26,883.33 compared with 27,035.78 achieved on Monday, even though the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at its last meeting for 2019 resolved to retain interest rate at 13.50 per cent.
They also retained Cash Reserve Ratio (CRR) at 22.5 per cent, Liquidity Ratio at 30 per cent and Asymmetric window at +200 basis point and -500 basis points, around the Monetary Policy Rate.
The market downtrend was impacted by losses recorded in large and medium capitalised stocks, amongst which are; MTN Nigeria, Unilever Nigeria, Access Bank, Dangote Cement and United Bank for Africa.
Analysts at Afrinvest Limited said that “despite the loss, we expect investors to take positions in fundamentally sound stocks, paving ways for price appreciation in the local bourse.”
Market breadth closed at par, with 17 gainers and 17 losers.
MTN Nigeria Communications recorded the highest loss for the day, dropping by N2 to close at N118 per share.
Unilever trailed with a loss of N1.15 to close at N16.30, while Access Bank was down by 50k to close at N9.30 per share.
Dangote Cement lost 40k to close at N144, while UBA declined by 30k to close at N7.05 per share.
Conversely, Dangote Sugar led the gainers’ table during the day, gaining 80k to close at N14.60 per share.
Nigerian Breweries followed with a gain of 40k to close at N50.90, while Flour Mills garnered 35k to close at N18.20 per share.
Fidson added 25k to close at N3.75, while Guaranty Trust Bank increased by 20k to close at N29.80 per share.
An analysis of the activity chart indicates that United Capital was the toast, accounting for 24.81 million shares worth N60.35 million.
Zenith Bank followed with an exchange of 24.11 million shares worth N446.97 million, while Dangote Sugar accounted for 18.89 million shares valued at N272.68 million.
Guaranty Trust Bank sold a total of 17.81 million shares valued at N530.09 million, while FBN Holdings traded 14.53 million shares worth N101.09 million.
Meanwhile, the Monetary Policy Committee (MPC), has retained the Monetary Policy Rate (MPR) at 13.5 per cent while other policy parameters remained constant.
Mr Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN) made this known after the MPC’s meeting in Abuja on Tuesday.
Emefiele disclosed that all the 11 members of the committee attended the meeting and unanimously voted for the decision.
He said the committee also retained Cash Reserve Ratio (CRR) at 22.5 per cent and the Liquidity Ratio at 30 per cent.
The CBN said that the MPC also retained the Asymmetric Corridors at +200 and -500 basis points around the MPR.
He explained that the committee reviewed the upside and downside on the option to tighten, loosen or hold.
Emefiele said while tightening might encourage capital flow, it also had downside consequences of tightening the already nascent recovery outlook growth.
He said that the MPC noted that the reduction in the policy rate would improve growth prospects but in view of optic inflationary pressure, decided that the balance of the risk was in favour of protecting price stability.
According to him, considering the recovery decline in market interest rate growth in domestic, the committee feels there will be more gains in shortfall to medium term.
He further explained that in holding policy at the current position, the committee noted with pleasure the positive outcome of action already taken by the bank.
Emefiele enumerated the steps taken by CBN in this direction to include policy on loan to deposit ratio which had resulted in loans advancing and rising by N1.1 trillion between June and October.
He said this action had assisted the agriculture and manufacturing sectors hence the positive outcome on the GDP.