The selling pressure witnessed on the shares of Geregu Power Plc during Monday’s trading session on the NGX resulted in shareholders losing about N30.250 billion.
Checks by Nairametrics showed that the energy firm’s stock price dropped by 9.85% to N110.70 per share from N122.80 with which it opened the trading session yesterday.
Further analysis showed Geregu closed the trading day with N276.750 billion in market capitalization, as against N307.000 billion at the beginning of trading.
Negative sentiment: The drop in Geregu’s share price was due to investors’ negative sentiment which triggered sell-offs. 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.
The sell pressure: The relentless sale pressure (particularly by Foreign Portfolio Investors (FPIs)) is coming on the back of high commodity inflation caused by the Russia-Ukraine war, which has led to a spike in interest rates and, in turn, led to a jump in bond yields.
- Foreign institutional investors invest in Nigerian 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 Geregu’s loss, Nigerian equities opened the week on a positive note, extending gains from the previous session as the All-Share Index recorded a gain of 0.21% to close at 48,253.59 points, the highest point since 05 October.
- The market’s performance was primarily driven by gains in industrial heavyweight BUA Cement Plc (+3.90%) and Nigerian Breweries Plc (+2.22%). Consequently, the year-to-date (YTD) return rose to 12.96%, while the market capitalization gained N53.89 billion to close at N26.28 trillion.
- Further analysis of the day’s market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 18.69%. A total of 633.74 million units of shares valued at N4.10 billion were exchanged in 3,398 deals.