The Nigerian Stock Exchange (NSE) All-Share Index (ASI) rose further Monday as equities sustained the positive momentum for the second trading day in 2014. The market had recorded a growth of 47 per cent in 2013, surpassing analysts’ and operators’ forecasts.
Although the market opened 2014 with a decline the first day, it picked up last Friday. The positive trend was sustained yesterday as the ASI rose 0.13 per cent to close at 41,507.30. Market capitalisation added N18 billion to close at N13.282 trillion.
Market operators had expressed optimism that the market would continue to be bullish in the first quarter of 2014, on the strength of expectations of improved full year corporate results for 2013.
By the close of trading yesterday a total of 29 stocks added value led by Union Dicon Salt Plc with N1.23 or 10.2 per cent to close at N13.31. Union Dicon Salt is recovering from profit-taking it suffered after gaining 162 per cent within one month.
The stock had appreciated from N4.22 to peak at N11.06 on December 18 following a strategic partnership with CBO Capital Partners as core investor. However, profit-taking set in recently and drove the shares down to N12.08.
But it began another round of upward movement yesterday, leading the price gainers’ table with N1.23 to close at N13.31 per share.
WAPIC Insurance Plc trailed with a gain of 9.76 per cent to close at N1.32, while Prestige Assurance Plc and ABC Transport Plc went up by 8.7 per cent and 8.5 per cent to close at N0.69 and N1.02 per share respectively.
Japual Oil and Maritime Services Plc and C & I Leasing Plc appreciated by 7.9 per cent and 7.1 per cent in that order.
C & I Leasing Plc last week announced a revenue of N9.1 billion for the nine months ended September 2013, compared with N9.2 billion in the corresponding period of 2012. Profit after tax rose from N188 million to N219 million.
Caption: FGN logo
FGN Bonds Dominate Debt Market with N3.9tn
The Federal Government Bonds continued to dominate the debt sector of the Nigerian Stock Exchange (NSE), accounting for 22.18 per cent as at the close of trading yesterday.
The Nigerian bourse comprises the debt and equities markets. The debt market has a market capitalisation of N4.608 trillion, comprising Federal Government, State and Local Governments, corporates and supra-national.
THISDAY checks revealed that the FGN bonds account for N3.969 trillion or 22.18 per cent. States and local governments bonds followed with N471 billion or 2.63 per cent, while corporates have a share of N154.92 billion or 0.865 per cent. Supra-national bonds account for N12 billion or 0.017 per cent.
The dominance of the FGN bonds of the debt market results from the constant raising of funds from the capital market to finance budget deficit.
Although there have been complaints that the debt issuance programme of the federal government was crowding out private firms, the Director-General of the Debt Management Office(DMO), Dr. Abraham Nwankwo, had said the government was reducing its level of debt issuance.
According to him, the practice of financing part of the country’s fiscal deficits by borrowing from the bond market has not only led to the development of the domestic debt market, it has brought other salutary benefits for monetary policy operations and the economy.
Nwankwo noted the transformation of the bond market, which the agency championed, has removed conflict of interest by making clear separation of debt management functions from monetary policy operations, thereby allowing other agencies, especially the CBN, to concentrate on its core mandate.
“The transformation of the bond market and raising funds from the market has subjected government’s borrowing to market discipline; using long-term as against short-term funds to finance long-term projects, which is a clear case of optimal asset-matching; significant reduction in refinancing risks through tenor elongation and establishment of a Sovereign Yield Curve and benchmark for private sector borrowing,” he said.
Going forward, he said the focus of public debt management in Nigeria will remain maximising benefits from the domestic market and International capital market to motivate the private sector to mobilise stable capital for funding of real sector and infrastructure projects.