The selling pressure witnessed on the shares of Nestle Nigeria Plc during Thursday’s trading session on the NGX has resulted in shareholders losing about N94.326 billion.
Checks by Nairametrics showed that the consumer goods stock dropped by 10% to N1,071 per share from N1,190.00 with which it opened the trading session yesterday.
Further analysis showed Nestle closed the trading day with N848.934 billion in market capitalisation, as against N943.260 billion at the beginning of trading.
Negative sentiment: The decline in Nestle’s share price was due to investors’ negative sentiment which triggered sell-offs, plunging the stock’s value down. This comes amid a build-up to the 2023 general election and a recent interest rate hike by the Central Bank of Nigeria.
Market operators earlier told Nairametrics that the decision of the CBN to increase the interest rate by 16.5% could hurt the equities market, by prompting investors to navigate towards fixed-income space.
Capital flight explained: The relentless sale pressure by Foreign Portfolio Investors (FPIs) is on the back of high commodity inflation caused by the Russia-Ukraine War, which led to a spike in interest rates and, in turn, led to a jump in bond yields in the US and other developed markets.
Foreign institutional investors invest in Nigeria stocks or other emerging markets when they have excess liquidity (low borrowing costs). However, if bond yields rise in the US, money will move away from emerging markets.
In case you missed it: Despite Nestle’s loss, trading activities on the floor of the Nigerian Exchange (NGX) closed Thursday’s trading day with a gain of N203 billion in market capitalization, as bulls maintained their grip on the local bourse.
The All Share Index (ASI), increased by 0.80% to close at 46,604.94 points. In the same vein, market capitalization appreciated by N203 billion.
