Equities market records modest gain amid speculative pressure

THE equities market closed yesterday on a positive note, as Nigerian Stock Exchange (NSE) All Share Index (ASI) appreciated by 0.17 per cent to close at 30,410.39 basis points, compared with the 0.16 per cent appreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at 12.25 per cent.

Market breadth also closed positive as Okomuoil led 23 gainers against 19 losers topped by Premier Breweries at the end of yesterday’s session – an improved performance when compared with previous outlook.

Turnover equally closed positive as volume moved up by 24.75 per cent against 58.96 per cent decline recorded in the previous session. FBNH, Access and Custodyns were the most active to boost market turnover. Wapco and UACN topped market value list.

Volume shockers included Presco that led the list of active stocks that recorded impressive volume spike at the end of yesterday’s session.

Meanwhile, talking about the effects of the Treasury Single Account, experts explained that the sell-down on assets and strained liquidity may have affected liquidity positions today, but the net effect on liquid funds is not as restrictive given that the greater quantum of funds are private sector deposits.

Elixir Research analysts said: ‘‘Also, the possible revision of the CRR downwards, will also have the effect of partially offsetting the impact of the sterilization.

The head of Research and Strategy, Elixir Investment Partners Limited, Abiodun Keripe, explained that the implementation of the Treasury Single Account will have negative liquidity impact on the banking system and expectedly earnings of the bank which will in turn weigh down investor sentiment.

According to him, the TSA implementation may also lead to a jump in interbank lending rates aided by other tightening policies such as the funding 48 hours before FX bidding policy.

‘‘In all, the market might see some pull back as investors and participants interpret and react differently to the TSA implementation,” he said.
Analysts said they would expect the Central Bank to react by directly or indirectly relaxing liquidity tightening.

This can take any form such as reduction in Open Market Operations auctions, reducing the CRR or paying some form of interest on bank’s cash sitting with the CBN. We look forward to the MPC meeting next week.

‘‘The expected savings for the government due to the TSA implementation I believe is more important,” said Keripe. ‘‘While there will be short-term volatility from the implementation of the TSA initiative, in our opinion, it will be just that, short term,” they said.