Fixed income securities with high yields stop Bull Run in the Stock Market

stock exchange

Last week, investors traded 2.4 billion shares worth N47.9 billion in 54,982 transactions on the exchange’s floor.

The volume was less than the N95.1 billion worth of 3.893 billion worth of units that were traded in 69,117 trades the week before.

Similar to this, sell pressure in MTNN (-5.2%) and BUA cement (-10%) reduced market capitalization and the All-Share Index by 2.4% to close the week at N55.735 trillion and 101,858.37, respectively. These reductions brought the YTD and MTD returns to +36.2 percent and +0.7 percent, respectively, while all other indices finished lower except for NGX ASeM, which saw an increase of 4.63 percent.

Paul Uzum, Head of Equity at Planet Capital, stated specifically that the stop rate on a one-year T-bill increased to 19% with an implied annual yield of 23%. Therefore, many would be selling equity to convert to Treasury bills if fixed income could yield as much as 23 percent for investors.

“The market reacted to the news that Thursday will sell off across the market. Nonetheless, during today’s trading session, stability was restored.”

According to Cordros Securities analysts, “We expect investors to continue to scale down their exposure to equities amid expectations of a continued uptick in fixed income yields, which will likely perpetuate the weak sentiments that dominated the local bourse this week.”

Cordros Securities analysts stated: “We anticipate that the negative sentiments that dominated the local stock market this week will continue as investors reduce their exposure to stocks in anticipation of a sustained increase in fixed income yields.”

According to Vetiva Dealings and Brokerage: “With rising rates in short-term fixed-income instruments, the market recorded its first negative weekly close as sentiment remains bearish. Next week, we anticipate a mixed trading session as investors exercise caution.”

With 1.7 billion shares worth N28.5 billion exchanged in 25,751 deals, the financial services sector dominated the activity chart when evaluated by volume. This sector accounted for 68.1% of the overall stock turnover volume and value.

Following 210.3 million units valued at N2.9 billion in 4,419 agreements was the conglomerate’s industry. The oil and gas sector came in third with a turnover of 203.8 million shares in 4,544 deals valued at N2.1 billion.

The top three stocks, as determined by volume: FBN Holdings Plc, Transnational Corporation Plc, and Jaiz Bank Plc, accounted for 732.8 million shares valued at N13.7 billion in 7,040 transactions, or 29.6% of the total equity turnover.

This week, 659 deals totaling 3.144 million exchange-traded products (ETPs) with a combined value of N108.299 million were completed. 


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