Investors lost over N94.326 billion as a result of the selling pressure that occurred on Nestle Nigeria Plc shares during Thursday’s NGX trading session.
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 research revealed that Nestle ended the trading day with a market capitalization of N848.934 billion, down from N943.260 billion at the start of trade.
The decrease in Nestle’s share price was brought on by investors’ pessimism, which led to sell-offs and a subsequent reduction in the stock’s value. This occurs as the general election in 2023 approaches and the Central Bank of Nigeria just raised interest rates.
Market participants claim that the CBN’s decision to raise interest rates by 16.5% could damage the stock sector by encouraging investors to move their money into the fixed-income market.
Due to the high commodities inflation brought on by the Russia-Ukraine War, which spiked interest rates and, in turn, increased bond yields in the US and other developed markets, Foreign Portfolio Investors (FPIs) have been relentlessly pressuring sellers.
When they have extra liquidity, foreign institutional investors invest in Nigerian stocks or other emerging markets (low borrowing costs). However, if US bond yields increase, investors would pull their money out of emerging markets.
Notwithstanding Nestle’s loss, trading on the floor of the Nigerian Exchange (NGX) ended the day’s trading on Thursday with a gain of N203 billion in market capitalization as bulls kept control of the local stock exchange.
The All Share Index (ASI), which closed at 46,604.94 points, climbed by 0.80%. The market capitalization increased by N203 billion in a similar vein.
