Stock market sheds N480bn on T-bills higher yields

Nigeria’s stock market took a dip of 0.86 percent on Thursday as investors started to rotate funds in search of higher yields on Treasury Bills (T-Bills).

The value of listed stocks dropped by about N481 billion at the close of trading on the Nigerian Exchange Limited (NGX).

The Central Bank of Nigeria (CBN) sold a record N1.8 trillion worth of T-Bills at an auction on Wednesday, nearly two times the N1 trillion on offer.

That was the highest amount of cash raised through T-Bills in a single auction since the CBN started tracking data.

Analysts had said ahead of Thursday’s stock trading that with low-risk assets providing more attractive yields, investors will reprice dividend yield upwards, thereby leading to a correction in the short term in the equities market.

At the Primary Market Auction (PMA), T-Bills totalling N1 trillion (N200 billion, N200 billion and N600 billion across the 91-day, 182-day, and 364-day instruments, respectively) were offered.

The yield on the one-year Nigerian T-Bill jumped to 23.4 percent at the auction Wednesday in what could be a game changer for attracting foreign portfolio investors into the country.

The current yield when matched with the latest inflation rate of 28.92 percent lowers the negative real return on the one-year T-Bill to 5.52 percent as against the previous negative return of 16.68 percent.

While expecting a mixed trading after Wednesday’s flat close, Lagos-based Vetiva Research analysts noted that foreign stock investors remain on the sidelines, given the bearish sentiment in the market.

Stocks that led the decliners league include NASCON, which dropped from N65 to N58.50, followed by Eterna, which decreased from N22.10 to N19.90, and Sterling Financial Holdings Company, which dipped from N5.90 to N5.31.

The NGX All-Share Index and market capitalisation stood lower from the preceding day’s 102,106.31 points and N55.87 trillion respectively to 101,227.42 points and N55.39 trillion.