The NSE All Share Index dropped to its 7 weeks low yesterday and dipped below 40,000 points for the first time since December. Some newspapers attribute this drop to Sansui’s recent statement that the CBNcould increase the Cash Reserve Requirement on public funds to 100 per cent.
“The public sector CRR is 75 per cent. We will probably move to 100 per cent. If you look at the statement of the last MPC meeting, you will see that I was in the minority. I was outvoted. I wanted to increase the private sector CRR to 15 per cent because I think monetary policy conditions are not tight enough.”
At the close of trading, the Nigerian Stock Exchange All-Share Index sank by 2.24 per cent or 900.67 basis points to close at 39,378.15 points. It was the biggest decline by the index in many months.
Also, the market capitalisation of the listed equities depreciated by N289bn or 2.24 per cent to close at N12.623tn.
With the exception of the NSE AseM Index, which closed flat, all the sectoral indices fell on Thursday. Only eight equities recorded price appreciation, compared to 53 losers.
There has been a sustained equity sell-off in emerging markets, but analysts had expressed the hope that the earning season would cause equities to rally. That has not been the case.
Materials from Punch was used in writing this article
“I believe today’s losses were so much because of what the CBN governor said with regards to the CRR,” the Chief Executive Officer, Enterprise Stockbrokers Plc, Mr. Rotimi Fakayejo, said.
According to him, considering the negative impact the earlier increases in CRR had on the market, many people came in on Thursday with so much apprehension.
“And the market lost like it has not lost in a year,” he said, adding that the decision of some foreign portfolio investors to offload their shares was also a factor.
Fakayejo, however, urged investors to take advantage of the situation by coming to take positions.
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