Nigeria stock market down 1.7% at mid-day trade

The Nigeria Stock Exchange All Share Index is down 1.7% in mid-day trade as businesses grapple with a forex crisis. Wale Okunrinboye, Research Analyst at ARM Investment Managers, joined CNBC Africa to discuss and review the stock market's performance. The market has been reacting to the effects of a forex crisis in the country, with businesses facing challenges due to a shortage of foreign exchange. The NSE All Share Index saw a decline of 1.7%, reflecting the concerns and uncertainties among investors. Okunrinboye mentioned that the market had shown positive movement the previous day, but the current pullback might be due to investors' bearish sentiment regarding the impact of the dollar scarcity on companies. The discussion highlighted the impact of the forex shortage on the banking sector, with some banks facing pressure to settle dollar debts. The Central Bank of Nigeria's actions to enforce debt payments from banks have added to the challenges faced by financial institutions. The forex scarcity has led to trade lines being suspended or contracted for many banks, limiting their ability to conduct business effectively. Okunrinboye noted that while some banks swiftly complied with the debt payment requirements, others seemed surprised by the central bank's actions. The conversation also delved into the weakening value of the Naira and its implications for listed companies, especially those in the consumer goods sector. Companies dealing with consumer products are feeling the impact of both the forex scarcity and inflation, leading to potential earnings compression. The high cost of raw materials and dollar exposures have put pressure on these companies, affecting their financial performance. The consumer goods sector has witnessed significant losses and challenges, with companies struggling to pass on increased costs to consumers. Overall, the forex shortage in Nigeria has had far-reaching effects on the stock market, with businesses across various sectors feeling the impact of limited access to foreign exchange. The uncertain economic climate and challenges faced by companies have contributed to the bearish sentiment in the market. Investors are closely monitoring developments in the forex market and government policies to assess the market's future trajectory.