Crash in money market instruments triggers N2.3tr gain

Investors on the Nigerian Stock Exchange (NSE) gained N2.3 trillion in November, as the market recorded its best monthly appreciation since 2018 on continued inflow of funds following persistent crash in money market instruments.

At the close of transactions last month, capitalisation of listed equities, which stood at N15, 931 trillion as at Monday, November 2, 2020 when the market resumed trading for the month of November, increased by N.2. 378 trillion to close at N.18, 309.6 trillion as at November 30, 2020.

The All-share index, which measures the performance of quoted companies rose by .4,308.67 points or 12.29 per cent from 30.479.39 to 35, 042.14.

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Market performance in the month under review pushed the growth of the market to 30 per cent, making the Nigerian equity market one of the best performing.

After recording negative performance in the first quarter of this year, the equity market recovered in the second quarter, and has since sustained the trend.

Reacting to the development, Managing Director of Maxi Fund Investment and Securities, Okechukwu Unegbu, linked the result to fixed income and absence of alternate attractive investment option.

He said: “Because money market has collapsed, treasury bill is very low, if you put any investment in money market, it is less than one per cent, no investor would want to do that. A lot of fund is coming into the equity market.”

On how to sustain the positive story, Unegbu said government must reduce company’s tax, implement policies that could boost employment generation and grow the real sector.

NSE’s Chief Executive Officer, Oscar Onyema, had attributed the rally to the Central Bank of Nigeria’s (CBN) restriction of domestic investors from participating in its open market operations (OMO) and the cut in interest rates.

He said investors were always in search of higher returns on investments, adding that the apex bank’s programmes had made the stock market attractive to players.

According to him, since the Nigerian economy has shifted to a negative real interest rate environment, investors are now in search of investments that would give them higher returns.