Investment Returns Swerve in Nigeria’s Equity, Fixed Income Markets
Equity investors lost about N56 billion at the local bourse on Tuesday as the yield on fixed income instruments slides in a rare development pertaining to the movement of investable funds.
It was a double loss for market participants with interest in financial markets despite the reverberation of economic improvement, some analysts actually think that yield would stand down for the rest of the year in the fixed income space.
Just as reports from investment banking firms indicate that the cloud is gathering in the equity space, negative returns on fixed interest rate instruments have kept investors in a tight corner as it cost money to keep money out of markets.
Though slowdown was witnessed across the financial markets, liquidity position improved. This kept the interbank rates lower to single digits as open buy back and overnight rate print at 6 per cent and 6.50 per cent respectively.
However, Naira appreciates in the investors and exporters windows as analysts projected that foreign exchange rates would remain under pressure in the parallel market.
Analysts, Currencies traders told MarketForces Africa Wednesday that a strong dollar index makes imports expensive but weak local production would deny the country any meaningful exports advantage.
In the bond space, bearish runs resume as average yield rise in the secondary market. However, cryptocurrency space continues to rallies amidst the CBN plans to launch e-naira in October 2021.
The Central Bank has slowdown open market operations bills issuance, while third quarter Treasury bills issuance came to a close on August 26, according to the calendar seen by MarketForces Africa.
Local borrowing appears to be unlikely as the federal government made Eurobond calls after it announced Bookrunners and financial advisers for the foreign currency raise.
However, analysts have raised concerns over debt costs associated with foreign loans to compare with local borrowing but the economy runs crowing out risk if government sustains local borrowings further.
In the first half, Nigeria had accessed N1.81 trillion from the local debt market as debt management office scrabbles for low-interest obligations securities.
Meanwhile, the US government is in the middle of a plan to commence bond-buying, which analysts believe would release free cash for further investment as African countries move to raise dollars from Eurobond in the latter part of 2021.
Read Also: Banks Returns Projected to Rise as Rate Cut Lower Funding Costs
Where are Nigerians investing in the second half of 2021? Watch out for this space.
Investment Returns Swerve in Nigeria’s Equity, Fixed Income Market
