Global Stock Market Crash Spreads to NGX: MTN Nigeria Suffers Major Losses

A global stock market crash that began on Friday is gradually affecting the Nigerian Exchange (NGX). Midday trading data shows a 0.27% decline in the NGX All-Share Index as of 12:30 PM on August 5, with MTN Nigeria being the hardest hit.

MTN Nigeria’s stock has plummeted to its lowest price since October 2021, trading at N179 per share as of 12:30 PM, marking a 5.79% decline. Banking stocks are also experiencing downturns, with Wema Bank down by 4.76% and GTCO losing 1% of its market capitalization.

The decline in MTN Nigeria’s stock is further exacerbated by service delivery issues, including a significant increase in dropped calls since August 1.

The sell-off began on Friday, August 2, when the US Labor Department released July job data showing a rise in unemployment to 4.3%, the highest since September 2021. This triggered a global sell-off, leading to crashes in the European and Asian markets on Monday.

Asian markets saw significant declines, with the Nikkei 225 Index dropping by 12.40%, the Hang Seng Index by 1.60%, and the Shanghai Stock Exchange Composite Index by 1.54%. European markets followed suit, with the CAC 40 down by 2.26% and the FTSE 100 by 2.08%.

Big tech stocks have been major casualties, with pre-market data showing Microsoft down by 4.53%, Meta by 4.92%, Tesla by 5.44%, and Nvidia falling 20% from its all-time high.

The US Federal Reserve’s decision to maintain benchmark rates despite declining inflation has strained economic activities, leading to higher unemployment and sparking fears of a recession. NASDAQ closed with a 2.43% decline, and the NYSE Composite Index fell by 1.79%.

Foreign participation in the NGX was about N82.2 billion (~$54.8 million) as of June 2024, representing 23.18%. The low level of foreign participation has somewhat insulated the NGX from global market shocks, but the current sell-off is starting to have an impact.