The selling pressure seen on Nestle Nigeria Plc shares during Thursday’s trading session on the NGX cost shareholders approximately N94.326 billion.
According to entrepreneurng, the consumer goods stock fell 10% to N1,071 per share from N1,190.00 when it opened the trading session yesterday.
Nestle ended the trading day with a market capitalisation of N848.934 billion, down from N943.260 billion at the start of trading.
Negative sentiment
Nestle’s share price fell due to investors’ negative sentiment, which triggered sell-offs, lowering the stock’s value. This comes as the country prepares for the 2023 general election and the Central Bank of Nigeria recently raised interest rates.
Market participants previously told Naijaonpoint that the CBN’s decision to raise interest rates by 16.5% could harm the equities market by driving investors to the fixed-income space.
Capital flight explained
Foreign Portfolio Investors (FPIs) are relentlessly selling due to high commodity inflation caused by the Russia-Ukraine War, which resulted in a spike in interest rates and, as a result, a jump in bond yields in the US and other developed markets.
When foreign institutional investors have excess liquidity, they invest in Nigerian stocks or other emerging markets (low borrowing costs). If bond yields in the United States rise, money will flow out of emerging markets.
In case you missed it, here it is again
Despite Nestle’s loss, trading on the Nigerian Exchange (NGX) ended Thursday’s trading day with a market capitalization gain of N203 billion, as bulls maintained their hold on the local bourse.
The All Share Index (ASI) rose 0.80% to 46,604.94 points at the close. Similarly, market capitalization increased by N203 billion.
