The Nigerian Stock Exchange All-Share Index on Wednesday posted the
biggest return since the beginning of this year, as investors reacted
positively to the Central Bank of Nigeria’s Monetary Policy Committee’s
decision to allow a flexible foreign exchange regime.
The market
capitalisation appreciated by N354bn to close at N9.706tn from N9.352tn
on Tuesday, while the NSE ASI closed at 28,260.61 basis points from
27,231.50 basis points the previous day.
Tuesday’s decision
of the CBN to adopt a flexible exchange rate policy was a shift from a
peg of 197 to 199 for the naira, against the dollar which analysts see
as overvalued and hampering investments.
A total of 474.402 million shares worth N3.503bn exchanged hands in 5,260 deals on the floor of the NSE on Tuesday.
The
financial services and industrial goods sectors were the biggest
beneficiaries of the renewed investor interest as they gained 589 basis
points and 416 points. United Bank for Africa, Oando Plc, Zenith Bank
Plc, Diamond Bank Plc and FCMB Group Plc emerged as the top five
gainers.
UBA shares appreciated by N0.45 to close at N4.87 from N4.42, while those of Oando closed at N6.63 from N6.02 the previous day.
The
price of Zenith Bank’s stocks closed at N16.51 from N15.00 on Tuesday,
appreciating by N1.51, while that of Diamond Bank rose to N2.11 from
N1.92, gaining N0.14. FCMB shares also appreciated by N0.14 to close at
N1.56 from N1.42 the day earlier.
The top five losers were Mobil
Oil Nigeria Plc, Union Dicon Salt Plc, Glaxo SmithKline Consumer Nigeria
Plc, Ikeja Hotel Plc and Forte Oil Plc.
FBN Holdings Plc topped
the volume chart for the second consecutive session, trading 73 million
units, whilst GTBank led the value chart, trading 46 million units worth
N960m.
Analysts at Vetiva Capital Management Limited said,
“Given the strong demand observed in today’s (Wednesday) session as
indicated by market breadth, volume and value, we see room for further
gains in Thursday’s (today) trading session as the MPC’s decision to
adopt a flexible exchange rate continues to whet investor appetite for
stocks across sectors.”
Bond prices also rose as traders bought
debt to cover positions taken before the central bank decision as they
had expected the main rate to stay at 12 per cent to boost the country’s
economy in view of slowing growth.
However, the naira remained
flat against the United States dollar at the parallel on Wednesday as
news over the adoption of a flexible exchange rate policy by the CBN
created uncertainties in the forex market.
The naira, which closed at 346 against the dollar at the parallel market on Tuesday, maintained the same value on Wednesday.
Analysts
said forex traders were confused over how the new rules would be
implemented. The central bank has only said it will give guidance within
days.
The forex traders, however, said they expected the policy shift to boost dollar supply and lure back foreign investors.