Nigerian Exchange Limited ASI Falls by 1.90% in March amid Retail Investors’ Sell-off

May 14, 2021/Cowry Asset Report

Image Credit: NGX Group

Freshly released report by the Nigerian Stock Exchange (NSE) on domestic and foreign portfolio participation in equities trading showed that total equities market transactions increased in March 2021 compared to the volume of transactions done in February 2021 amid increased participation by retail investors. It appears the huge transaction volume done by retail investors were more of sell-offs as depicted by the negative performance of the benchmark index in the month under review.

ECONOMY: Nigerian Exchange Limited ASI Falls by 1.90% in March amid Retail Investors’ Sell-off…

In line with our expectations, the local bourse witnessed another marginal decline in March given the shift by investors to the fixed income space amid rising yield environment which appears not to have reached resistance level. Despite the shift to fixed income securities, we still expect more of strategic positioning in stocks with high dividend yields. Meanwhile, with the growth in VAT reflecting positive impact of the partial economic recovery, we note that the option by the FG to implement phase four of the lockdown could limit gains.

FOREX MARKET: Naira Weakens against USD at Most Market Segments Despite CBN’s Move

In the new week, we expect Naira/USD to stabilize at most FX Windows as CBN has begun the process of harmonising the exchange rates given the report that it longer sells dollars to the public sector at the official rate. It now sells at the I&E FX window at the going rate.

MONEY MARKET: Stop Rates Unchanged For All Maturities at Friday’s T-Bills Auction

In the new week, treasury bills worth N60.00 billion will mature via OMO; hence we expect interbank market rates to moderate amid ease in system liquidity. Also, we expect NITTY to move southward in the new week as traders waiting on the side lines begin to take position as stop rates closed flat.

BOND MARKET: FGN Bond Yields Moved in Mixed Directions for Most Maturities Tracked

In the new week, we expect local OTC bond prices to increase (and yields to moderate) as market participants take cognizance of the new approach by CBN to solving the exchange rate pressure. Hence, bullish run by traders may set in in the new week.

EQUITIES MARKET: Equities Market Index Rebounds by 0.72% amid Renewed Bullish Activity

In the new week, we expect the equities market to sustain its performance as the equities market provides anopportunity for positive real returns despite rising inflation rate.

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