Investors expect CBN’s policies to spur increased flows into equities

MONEY market participants and other investors have expressed optimism that the recent policies of the Central Bank of Nigeria (CBN) may result in increased investment flows into equities by local Pension Fund Administrators and asset management companies.

This they say is expected to be  in the near to medium term as they struggle to find alternative investment outlets to deploy their investible funds.

However, “we expect this to be done over time and not aggressively. In addition to that, we might see some positive sentiments filter in as more third quater (Q3) 2019 earnings reports are released,” dealers at Comercio Partners stated in note to clients.

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The dealers noted that   Morgan Stanley Capital International (MSCI) semi-annual review which should be out anytime now could equally shape the actions of offshore index trackers in the coming months.

In the fixed income space, dealers further observed that the bullish trend in the bond market is likely to persist in the coming months as investors seek higher yielding instruments as they are now ineligible to participate at Open Market Operation (OMO) auctions.

Given the significant impact of this policy on the fixed income market, “we would not be surprised if the policy directive is tweaked to ensure better liquidity in the treasury bills market.

“We expect the Naira to maintain its value relative to the US Dollar in the near to medium term as the CBN remains keen on maintaining the naira at current levels. While the continuous decline of the foreign exchange reserves remains an issue, it stays at the upper band of the $35 to $40 billion range which we consider sustainable. At the lower end of this range, we expect panic to set in,” the dealers from Comercio Partners stated.

Nigerian Tribune