This market is not favorable toward the telecom giant. The numbers of investors seem to be very low as the 2023 general election is around the corner. Interest rate hikes and rising inflation also contributed to this.
The report shows that the stock dropped by 10% to close at ₦1,620 per share from ₦1,800. The NGX (Nigeria Exchange) All Share Index dropped by 1,203.09 basis points or 2.53% to close at 46.365.95 index points from 47,569.04 points.
Analyst’s View on Airtel Loss
Speaking on Airtel’s loss, Executive Vice Chairman, Hicap Securities David Adonri, said,
“Right from the penultimate year to the elections. the socio-political atmosphere becomes charged. Politicians resort to violent rhetoric and divisive tactics, which deepens the country’s socio-political fault lines, to establish a competitive edge.”
“During this period, the economy becomes overloaded with money arising from excessive election spending that spikes inflation.” He added.
Speaking on the interest rate rises, Andori said,
“The hike is capable of migrating financial assets away from equities to fixed income. Expect investors to sell down their shares in the near term. Both equities and fixed income operate on yield.”
He added that, with the increase in the interest rate, “the yield in income will be higher and investors will move there until the price of equities fall to be competitive with the debt market.”
He concluded by saying that there would be stabilization if microeconomic improves and inflation starts dropping.
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