In April, investors in the Nigerian Exchange Market Limited witnessed a decrease in market value by N3.57 trillion as the All-Share Index faced a notable decline amidst recent banks’ recapitalization policy by the Central Bank of Nigeria.
This decline marks the first monthly drop for the NGX in the current year, in contrast to the gains of 17.7%, 12.47%, and 5.64% seen in January, February, and March respectively. Nonetheless, the NGX still maintains a year-to-date increase of 31.36%.
Various policy announcements made by the CBN played a significant role in the sharp decline of the index.
On April 2, 2024, the CBN introduced a new plan for commercial banks’ recapitalization, with the goal of generating an estimated N4 trillion in fresh capital over the next two years.
The market reaction was further intensified by the decision taken by the CBN’s Monetary Policy Committee to raise the benchmark interest rate by 200 basis points, elevating it from 22.75% to 24.75%.
These policies, driven by the apex bank, particularly the rate hike, have substantially contributed to increased sell-offs, leading to a 6% decline in the local bourse, with the benchmark index concluding at 98,225.63 points.
Consequently, the NGX All-Share Index slipped below the 100,000-point mark, ending the day at 98,225.63 points, a notable difference from its peak of 104,562.06 points at the close of March 2024.