 retained the Monetary Policy Rate (MPR) at 27.5%,){kind=link}
Investor sentiment at the Nigerian stock market turned bearish last week following the Central Bank of Nigeria’s (CBN) decision to retain the Monetary Policy Rate (MPR) at 27.5%. The CBN’s move, aimed at curbing inflation and maintaining monetary stability, led to a wave of sell-offs across several equities, triggering a market-wide decline in key indices.
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) slipped by 0.6%, closing at 109,028.62 points compared to the previous week’s 109,710.37 points. The decline reflects mounting investor caution amid rising interest rates and increasing capital movement toward safer assets like bonds and treasury bills.
Among the hardest-hit stocks were Transcorp Hotels (-15.0%), Transnational Corporation (-4.4%), Access Corporation (-8.1%), and Fidelity Bank (-10.3%). Fidelity Bank’s significant loss followed news about a potential winding-up order linked to a judgment debt. Although the bank issued a clarification through the NGX portal assuring investors of its financial stability, the stock remained under pressure.
As a result, Month-to-Date (MtD) and Year-to-Date (YtD) returns were moderated to 3.1% and 5.9% respectively, further dampening investor enthusiasm that had characterized early-year trading.
Despite the bearish tone, market activity remained strong. Trading volume surged by 43.2% and trading value increased by 11.0% on a week-on-week basis. This indicates that although investors were selling, market participation remained healthy, driven by repositioning strategies and bargain hunting.
Sectoral performance was mixed:
The Oil & Gas Index declined by -3.4%
The Banking Index dropped by -1.5%
On the upside, the Consumer Goods Index rose by 2.2%
The Insurance Index increased by 0.7%
The Industrial Goods Index also saw a 0.7% gain
The mixed performance suggests that while certain sectors experienced profit-taking and valuation concerns, others attracted renewed interest based on fundamentals and recent earnings.
Market analysts forecast that trading this week will continue to be driven by caution as investors await more definitive economic reforms from the Federal Government. Analysts at Cordros Research said:
“We expect cautious trading to persist amid a lack of clear positive catalysts, with profit-taking in recent gainers offset by bargain hunting in beaten-down names. In the medium term, sentiment will be shaped by macroeconomic trends and movements in fixed income yields.”
Similarly, InvesData Consulting noted:
“Investors need to be cautious in this oscillating market, especially during the earnings season and portfolio reshuffling. We are also watching for any policy announcement that could re-track the economy toward sustainable growth.”
The CBN’s decision to maintain the MPR at 27.5%—one of the highest in the region—signifies a continued focus on fighting inflation, which stood at 33.69% as of April 2025. However, this move also increases yields in the fixed-income space, attracting conservative investors and leading to capital outflows from equities.
Experts believe the current rate environment makes equities less attractive, particularly for risk-averse investors seeking guaranteed returns. As fixed-income instruments offer more stability, portfolio managers are increasingly rotating assets away from volatile stocks.
With no major catalysts in sight and the monetary policy environment tightening, investors are urged to tread carefully. The market’s outlook remains mixed in the short term, and strategic portfolio diversification—especially into fixed-income securities—may offer a more balanced approach amid the current volatility.