Rates to decline on liquidity boost from maturing bills

TREASURY-bills and Open Market Operation (OMO) bills will mature via the primary and secondary markets to exceed T-bills maturing via the primary market, hence dealers expect the stop rate to marginally decline amid fresh liquidity boost from the maturing bills and the bias of Central Bank of Nigeria (CBN) for an expansionary policy.

Similarly, dealers from Cowry Assets Management Limited said they expect the value of Federal government of Nigeria (FGN) bonds, especially for 2042s to increase (and yields to fall) amid increased demand due to the maturing bills in the money market.

Meanwhile, the latest released report by the Nigerian Exchange (NGX) on domestic and foreign portfolio participation in equities trading showed that total equities market transactions decreased by 43.24 per cent from N 323.38 billion in January 2022 to N183.56 billion in February 2022.

When compared to February 2021, the result shows that total transactions decreased by 14.85 per cent year-on-year (y-o-y).

Further analysis of the total transactions revealed that total domestic transactions decreased by 51.02 per cent month-on-month (m-o-m) from N282.07 billion in January to N138.13 billion in February 2022.

Total foreign transactions increased by 9.97 per cent m-o-m to N45.43 billion in February 2022, from N41.31 billion in January 2022.

The decrease in total transaction was chiefly due to the very weak appetite of foreign portfolio investors (FPIs) which continue to decrease amid sustained fear of foreign exchange volatility eroding their returns on investment and insecurity currently being encountered in the country.

Foreign investors appeared to have their reservations about the Naira not being fairly priced against the greenback.

More so, local investors seem to be taking profits as companies’ full year 2021 results are being released, while others, especially the institutional players, are taking position in expectation of the first quarter (Q1) 2022 financial results of corporates.

Also, the report showed that institutional composition of the domestic market m-o-m decreased by 58.85 per cent from N186.51 billion in January 2022 to N76.74 billion in February 2022.

The ratio of total domestic transactions to total foreign transactions tilted to 77:23 at the end of February 2022. As depicted by the numbers, total transactions on the NGX increased to N506.94 billion at the end of February 2022 (from N448.04 billion in January 2022).

A further breakdown of the FPI transactions m-o-m showed that foreign portfolio inflows rose to N20.86 billion (from N18.10 billion). Also, foreign portfolio outflows increased to 24.57 billion in February from N23.21 billion in January 2022.

On the part of local investors, there was increased stake in the equities market; their purchase transactions were N70.92 billion, higher than N67.21 billion worth of outflows.