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Monday, December 6, 2021

Nigeria’s equity market rises 4.9%, its highest daily rally in 2020

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By Samuel Bankole

The Nigerian equity market again closed on a positive note on Tuesday, lifted by gains in Dangote Cement, Lafarge Africa and FBNH as investors continued to hunt for value in the market.

Market players said the recent rally in the local bourse is driven by the regime of low interest rate and yields on money market instruments and fixed income.

Real interest rate across all tenors in Nigeria’s debt and money markets remain negative following the Central Bank of Nigeria (CBN) decision to slash its benchmark interest rate downward by 100 basis points to 11.5 percent to speed up credit to boost production in the economy.

The inflation rate stood at 13.22 percent in August while the Monetary Policy Policy (MPR) was slashed to 11.5 percent last month by the CBN, with interest rate payable on savings deposit pegged at 10 percent of MPR.

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Also, yields on Treasury bills came down to below 4 percent for the 1-year paper and 1.05 percent for the 3-month paper at an auction last week.

Analysts said the low interest rate regime had discouraged investors from putting their money in the money market while many of them are being lured to invest in the equity market to increase the value of their investment.

On Tuesday, the all share index gained 4.92 percent, biggest daily rally in recent time to close at 28,909.37 points.

Also, the market capitalisation of equities listed on the Nigerian Stock Exchange (NSE) increased to ₦15.110 trillion from ₦14.402 trillion it closed the previous day.

The total volume traded closed with an exchange of 749.468 million units valued at ₦9.50 billion traded in 8,075 deals. The market breadth was positive with 45 gainers as against 8 losers.

The NSE 30 Index increased by 5.68 percent to close at 1,243.50 points as against 1,176.63 points at the end of transactions on Monday. Market turnover closed with traded volume of 614.74 million units. \

Shares in Dangote Cement, which accounts for a third of the market capitalisation gained 9.86 percent, Lafarge Africa gained 9.69 percent while FBNH, the holding company for Nigeria’s oldest bank, First Bank rallied 9.91 percent.

Analysts said the increased interest in the equity market will continue till the close of the year as long as the low yield and interest rate regime persist.

They said many investors will continue to take position in the market to enable them reap from the growing positive performance by listed companies, which have been projected to close the year on a positive note with many of them declaring bomper dividends.

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