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By Babajide Komolafe and Michael Eboh

EQUITIES: Marginal gains in market indices
BONDS: Bond prices to continue upward trend
FOREIGN EXCHANGE: Naira to experience relative stability
MONEY MARKET: Cost of funds to remain stable

Marginal gains in market indices

The bearish trend recorded last week is expected to ease
slightly, this week, giving way to a fluctuating trend, as investors take position ahead of the barrage of financial statements expected this month  from banks and other companies quoted on the Nigerian Stock Exchange (NSE). |

The market indices are expected to record improvement, as investors buy some of the stocks that recorded decline in the prices, while speculators continue to trade off some of their shares and take advantage of gains recorded in the past few days of bullish trading.|

Last week, a  bearish trend was recorded on the Nigeria Stock Exchange (NSE) as investors lost a significant portion of their investment in the market. The value of their investment, represented by the market capitalisation depreciated by N44.23 billion.

The capitalisation and another major market indicator — the All-share index both dipped by 0.8 per cent each. The capitalisation which opened the week at N5.580 trillion dipped by N44.23 billion to close the week at N5.536 trillion, while the All-share index lost 183.64 basis points to close at 22,985.00 points from 23,168.64 it opened.

It would be recalled that common year-end directive of the The Central Bank of Nigeria (CBN) to banks became effective December 31st 2009. Hence, the banks are expected to begin turning in their financial statements from March. This is expected to drive activity in the capital market.

However, it is already known that a number of the banks are not likely to declare dividends for their just concluded financial period, due to their heavy provisioning for bad debts made within the period, as directed by the CBN.

It is expected that investors’ confidence will be rekindled in the banks as their true state of affairs become clear and known to the investing public.
The banks have been accused in the past of deceiving the investing public through the release of bogus financial statements among others.

Bond prices to continue upward trend
The bullish trend in the bond market will persist this week with prices further going up with increased demand powered by idle funds in the money market.

Last week, the market was seriously bullish with the top five bonds gaining N4.26. According to data from the Financial Market Dealers Association of Nigeria (FMDA), the highest gainer for the week was 4th FGN Bond series 11 which rose by N9.74 to N122 from N112.26. 4th FGN Bond series 9 came second with N3.99, rising to N116.93 from N112.94. 4th FGN Bond series 11 came third  N3.38 price increase, from N111.5 to N114.88.

The third and fourth positions went to 6th FGN series 3 and 6th FGN series 4, which rose by 3.11 and N2.94 respectively. Series 3 rose to N143.74 from N140.63, while Series 4 rose to N101.55 from N98.6.

Over all  a turnover of 308.04 million units worth N378.24 billion was recorded last week, in 4,297 deals, in contrast to a total of 368.82 million units valued at N433.34 billion exchanged the previous week in 5,388 deals.
The most active bond was the 4th FGN Bond 2014 Series 11 with a traded volume of 40.15 million units valued at N48.33 billion in 764 deals. This was followed by the 6th FGN Bond 2029 Series 3 with a traded volume of 33.7 million units valued at N48.497 billion in 319 deals.

Of the 38 FGN Bonds available, 19 were traded in the week under review, compared to 17 in the preceding week.

Mutual Funds
Mutual funds listed on the Memorandum Quotation sector of the Nigerian Stock Exchange (NSE) are expected to perform better this week.
This is especially as fund managers reposition and re-strategise ahead of the end of the first quarter of the year.

A lot of activity is expected in the mutual funds sector this March, as fund managers are expected to release the result of the performance to investors for the quarter.

Naira to experience relative stability

The Naira is expected to enjoy relative stability this week given the increase foreign exchange supply last week. Fresh supply is expected from oil firms this week complementing supply from the Central Bank of Nigeria (CBN) to douse demand in the market.

Last week, a combination of increased foreign exchange supply by the apex bank and oil firms particularly, the Nigeria National Petroleum Corporation (NNPC) helped the naira to appreciate by 10 kobo. From N148.71 per dollar the previous week, the official exchange rate closed to N148.61 while the interbank exchange rate remained stable at N150.4 per dollar.

Cost of funds to remain stable

Interbank interest rates should be stable this week with excess liquidity persisting in the money market. Last week, in reaction to the full impact of the inflow of more N600 billion from statutory allocation and excess crude funds, interbank interest rates dropped marginally with rate on Call lending dropping to 2.21 from 2.28 per cent. Interest rate on Seven days and 30 days lending also dropped to 4.04 and 8.83 respectively from 4.96 and 10.12 per cent.


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