OMO Policy: Market Value of Blue-chip Firms Plumet by N3.7trn

The Nigerian stock market experienced a significant downturn last week, with the market capitalization of 13 blue-chip firms on the Nigerian Exchange Limited (NGX) plummeting by N3.7 trillion. This marks one of the worst performances in recent history, causing the overall market capitalization to drop by 1.19% week-on-week to N156.624 trillion. The NGX All-Share Index also declined by 1.2%, closing at 242,619.20 basis points.

Capital market analysts attribute this sharp decline to two primary factors: the Central Bank of Nigeria's (CBN) new policy permitting individuals to participate in Open Market Operations (OMO) and the upcoming revised NGX pricing methodology. The CBN's decision to allow individuals access to OMO bills, previously restricted to institutional Money Market Dealers, has prompted investors to shift funds towards these instruments, which offer low risk and guaranteed high returns.

Among the hardest-hit companies were BUA Foods Plc, MTN Nigeria Communications Plc, and HBM Nigeria Plc. BUA Foods Plc saw an 11.1% drop in share price, resulting in a N1.52 trillion decrease in its market value. MTN Nigeria Communications experienced a 4.97% decline, reducing its market value by N839.8 billion, while HBM Nigeria's market value depreciated by 7.8%, a loss of N26.00 per share.

Other companies also faced substantial losses. First Holdco Plc's market value dropped by N245.6 billion following a 3.9% decline in its stock price. Unilever Nigeria Plc lost N158.56 billion in market value after its stock price fell by 23.4%. Meanwhile, the CBN's OMO auction last week attracted N4.93 trillion in subscriptions against N600 billion on offer, indicating a sustained high demand for OMO yields.