Based on the fact that it is necessary to save for the rainy days; local investors are moving resources into the fixed assets market with the purchase of commercial papers put forward by reputable companies considered too big to fail. Is it actually the way to go in an economy surrounded by insecurity? William Anaebonam, writes….
The persistent insecurity in the country has negatively affected the nations’ capital market, with investors now treading cautiously. Most of the local investors are more interested in profit-taking as companies declare Q1 results.
Some stock brokers interviewed by The Point, on the trend, were of the opinion that the good results coming out of the market indicated that the full year results would be good.
However, the foreign portfolio managers did not seem convinced as they were busy taking their portfolios to safer havens, that is, other countries such as Kenya and South Africa. For two weeks running, the NSE ASI and Market Capitalization had gone down by as low as two per cent.
As at two weeks to the end of the month of May, the NSE ASE and Market Capitalisation depreciated by 2.93 per cent to close the week at 38,324.07 and N19.975 trillion respectively.
Similarly, all other indices finished lower with the exception of NSE Oil and Gas, NSE Growth and NSE Sovereign Bond Indices which appreciated by 7.39 per cent, 0.62 per cent, and 3.02 per cent, while the NSE ASEM Index closed flat.
The index, as a barometer that gauges the pulse of the economy had shown that economic activities were low in the month of May. People had adopted the attitude of ‘wait and see’ with their money under the pillows or invested in some unregistered securities.
Consequently, activities shifted to the fixed assets market where companies resorted to issuance of commercial papers to raise funds in the capital market. Recently FMDQ Securities Exchange Limited, disclosed the approval and admission for quotation of the MTN Nigeria Communications’ N19.77 billion Series 3 and N53.74 billion Series 4 Commercial Papers under its N200.00 billion Commercial Paper Issuance Programme on its platform.
MTN Nigeria is Nigeria’s premier provider of connectivity, communication and collaboration solutions, and the largest privately owned mobile operator in Africa, Europe, and the Middle East.
The Chief Financial Officer, MTN Nigeria, Modupe Kadiri, said, “The issuance was well received by the market, with strong participation from a diverse group of investors, signifying the market’s continued confidence in our business.”
That came on the heels of a successful raising of funds by BUA Group using a similar method which was 38 per cent over subscribed.
The Head, Debt Capital Markets, Stanbic IBTC Capital Limited – sponsor of the Bond on FMDQ Exchange and Registration Member (Listing) of the Exchange – Tokunbo Aturamu, expressed delight at the successful issuance and listing of BUA Cement’s N115.00 billion 7.50 per cent, 7-year fixed rate series 1 bond.
He noted that this was the largest ever bond issued by a corporate issuer in the history of the Nigerian capital market and thanked the investor community for their overwhelming support of the bond issue and BUA Cement.
Recently the FMDQ Securities Exchange Limited, approved the quotation of the Union Bank of Nigeria Plc, N2.58 billion Series 8 and N32.38 billion Series 9 Commercial Papers under its N100.00 billion Commercial Paper Issuance Programme on the Exchange platform.
The Director General, Securities and Exchange Commission, Lamido Yuguda, had earlier stated that the Nigerian Capital market is still robust and activities of the past weeks indicated that investors’ confidence was still high.
Though the market capitalisation dropped in the past two months from 20 trillion to N19.975trillion, the turnover remained high in the week under review with a total turnover of 1.048 billion shares worth N11.543 billion in 17,233 deals traded in the week by investors on the floor of the Exchange. That was in contrast to a total of 840.334 million shares valued at N9.561 billion that exchanged hands the week before in 13,239 deals.
Market watchers shared the opinion that the interest shown by investors in fixed earn assets securities is an indication that there is excess liquidity in the system which can only come through some uncoordinated government economic programmes.
