Nigeria’s Market Hits by Economic Cracks - MarketNews

Market direction shifted negative as investors traded exit on naira assets. It was selling festival across financial markets in Nigeria on Thursday following a slowdown in economic growth.

Equities investors trading highs and lows in the domestics got a bearish launch as buying interest began to wane.  According to market analysts that spoke with MarketForces Africa, the downturn in the market is a correction of overbought listed companies.

Especially, those with weak fundamental and dividend track records. In the fixed income market, there was a rapt of selloffs on Nigerian Treasury bills, the same development seen around government bonds.

Thus, average yields across the curve are adjusted downward. Debt Management Office failed to raise N2.5 trillion from its latest auction due to changing sentiments.

Yields on government borrowing instruments have remained elevated but not enough to cover Nigeria’s double-digit high headline inflation rate.

In its latest update, the National Bureau of Statistics told Nigerians that the gross domestic product growth declined to 2.74% in 2023, down from 3.1% in 2022. The inflation rate accelerated to 29.90% in January, according to the statistics office.

Top investment firms in Nigeria have maintained consensus that inflationary pressures are not anticipated to abate in the near term, in addition to higher interest rates globally.

They expect that yields in the fixed income market to remain elevated in 2024 as the monetary authorities double down their efforts to narrow the country’s negative return and incentivise investors

Now, analysts are projecting that due to the worsening consumer price index, the central bank monetary policy committee have lesser choice than to hike rates.

Unfortunately, this will drive further economic contraction as companies struggle with dislocation in key economic indices. Still, the local market is ranking higher among places where investors are racking up gains. #Nigeria’s Market Hits by Economic Cracks – MarketNes

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