Nigerian Stocks Rise Beyond 70,000 threshold

 

By: Daniel Abigail

Refinitiv data revealed that on Wednesday, following a third straight session of gains in stocks, Nigeria’s share index crossed the psychological threshold of 70,000 points for the first time.

For the first time ever, the All Share Index (.NGSEINDEX) closed at 70,581 points after rising 1.94%.

Nigerian stocks began to rise at the end of May. When newly elected President Bola Tinubu announced changes to the nation’s foreign exchange market and eliminated a popular but expensive fuel subsidy that had been draining government coffers.
Due to the return of local capital to the equity market, stocks have increased by 35% since May. As real yields on the fixed income market turn negative, double-digit inflation has further reinforced the move to equities.
Due to currency problems, foreign investors have refrained from investing despite the recent rally.

Nigerian Stock Exchange

Following investors’ withdrawal from local assets during a period of low oil prices, Nigeria has experienced a scarcity of dollars. The central bank has not yet satisfied investors’ outstanding demands for dollars from investors looking to repatriate capital or from airlines looking to transmit money from ticket sales overseas. Investors have not yet returned.

“Nigeria now ranks highest on our risk-reward scorecard due to elevated carry, however we remain on the sidelines waiting for better line of sight on FX inflows and more consistent liquidity tightening measures,” Ayomide Mejabi, an analyst at JP Morgan wrote in a note.

The one-year Treasury yield increased to 21.2% from 17% at the previous auction in August, according to a JP Morgan analyst, following the central bank’s second treasury bill auction of the year held this week.

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