30 May 2016, Lagos – The Nigerian Stock Exchange (NSE) is set to hit the N10 trillion mark this week, in continuation of the superlative performance which greeted the decision of the Central Bank for Nigeria (CBN) to introduce a flexible exchange rate.
Last week, total value of shares listed on the NSE, or market capitalisation, rose by N573 billion, to a six month high of N9.353 trillion, as investors swooped on the stock market.
This prompted a flurry of increased demand for shares in anticipation that the new CBN policy will attract more foreign investors into the country.
“The recent rally in the market is due to the decision of the MPC to introduce a flexible exchange rate for the interbank market. This has helped to boost confidence as domestic players gradually position for a re-entry of foreign portfolio investors when the details of the new exchange rate mechanism is made known to the public,” said Mustapha Suberu, Research analysts at Eczellon Capital Limited.
According to Jimmy Omoregie Evbuomwan, Managing Director, Fidelity Finance Company Limited, the stock market gain is also being driven by re-alignment of portfolio from fixed income to equities.
“Investors are likely to re-align their portfolios in favour of equities market as fixed income instruments would become more unattractive due to the inflation trend associated with money market. This accounted for the rally recorded in the market in the previous week,” he said.
From N9.353 trillion on Tuesday to N9.926 trillion, market capitalisation rose by 6.1 per cent, while the All Share Index, ASI, closed higher, rising by 1,670.75 basis points or 6.1 per cent to settle at 28,902.25 points from 27,231.50 points on Tuesday.
Though sentiment waned at the close of transactions on Friday, as activity across sectors recorded only marginal increase while total value and volume declined, year-to-date return remained positive. Overall, the equities market closed 6.5 per cent higher Week to Week W/W, with Year to Date, YtD, returns now at +0.9 per cent.