Stock Investments Drop By N1.02trn As Buyers Shift To Fixed Income

Investments on the Nigerian stock market declined by N1.022 trillion in the first five months of the year.

Capital market analysts attributed the decline or volatility seen in the market during the period under review to rising yields in the Fixed Income (FI) market.

Yields on fixed income instruments which were depressed last year have been on an upward trajectory in 2021 amidst strong local demand for higher yields and the need to attract foreign interest in Nigerian securities amid  dollar shortage.

The overall market performance measure, All-Share Index (ASI), which tracks the general market movement of all listed equities on the Exchange, declined by 1,832.84 points or 4.55 per cent to close at 38,437.88 points on May 31, 2021 as against 40,270.72 points on January 4, 2021.The market capitalisation declined by N1.022 trillion to close the period under review at N20.045 trillion from N21.057 trillion at which it opened for trading activities on January 4, 2021.

Meanwhile, in the first quarter of 2021, Nigeria printed a year-on-year (y-o-y) real output growth rate of 0.51 per cent to N16.83 trillion ($112.24 billion) as it further recovered from last year’s recession, albeit slowly. So far, the country has seen federal government significantly ease lockdown measures as households and businesses have been allowed to resume economic activities, but not fully.

Although, the country’s recovery rate from recession appeared rather slow, the several billions of naira in economic stimulus packages provided by the monetary and fiscal authorities to help households and businesses cope with the effects of COVID-19 supported the fragile economic recovery.

Also, the Monetary Policy Committee (MPC) on May 25, 2021, decided to hold all key policy parameters constant. The Monetary Policy Rate (MPR) was unchanged at 11.50 per cent and the asymmetric band was retained at +100 bps and – 700 bps around MPR. Cash Reserve Ratio was retained at 27.50 per cent and the Liquidity Ratio left unchanged at 30 per cent.

Speaking on market performance for the first five months of the year, the founder of Tradelines DotBiz Investment Limited, Mr Tunde Jeariogbe, said equities performances on the floor of the Nigerian Stock Exchange were mixed, with January and April closing in the positive territory, while February, March and the just concluded month of May dragged performances through the bearish region.

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