• Tuesday, May 28, 2024
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Yield-hungry investors drive Nigerian equities to new high

Unrelenting bears push Nigeria’s bourse further into negative zone

Nigerian equities market, Friday, returned to the 30,000 point mark as the low-interest-rate environment seen in the fixed income space, continues to push investors towards stocks.

The All-share index of the stock market closed, 30,459.86 points, up by 3.47 percent from 29,439.35 points it opened with, recording its biggest daily gain in 17 trading days, according to data tracked by BusinessDay

The last time the ASI reached the 30,000 points range was on 14th June when it closed at 30,046.70 points. Since then, it has hovered around the 20,000 range, BusinessDay data shows.

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The uptick in the equities is driven by several factors the most of which is the ample liquidity in the market and the extremely low yield we have seen in the fixed income space, according to Gbolahan Ologunro, a senior research analyst at Cordros Capital.

“Since the country relaxed the lockdown measures, investors appetite has been broadly positive for stocks, and in terms of the available liquidity in the system as well, it has also supported buying activities in the stock market. As we saw the maturity of OMO funds coming into the market and non-bank domestic investors could not invest these funds in that asset class, they had to search for alternative asset classes to plug in that liquidity and given that yields in the fixed income market at already depressed at all-time low levels, we began to see an increased flow of funds into the stock market,”

“Also, the Q3 earnings published so far by most companies, have been broadly positive, that has also spurred buying interest,” Ologunro said in a phone response to BusinessDay.