Nigerian equities bounced back on Friday with the stock
exchange market capitalisation rising by N47bn, on a day that
President Muhammadu Buhari signed the 2016 budget into law.
Trading in the treasury bills market also closed the week on an
upbeat note as demand persisted across most maturities
(supported by the healthy system liquidity) – yields moderated
17bps on average.

Financial experts expressed no surprise at the immediate
reaction of the President’s assent to the budget from the
capital market and they stressed it would have a significant
impact on the real sector of the nation’s economy.
The stock market closed positive at week close with most key
sectors recording gains. Specifically, the Nigerian Stock
Exchange market capitalisation rose to N8.84tn from N8.793tn
in 24 hours.
Elsewhere, global markets traded mostly in the red as the
disappointing United States’ job data for the month of April and
renewed pressure on the oil price weighed heavily on investor
sentiment.
In Nigeria, a total of 181.108 million shares worth N1.166bn
were traded in 3,710 deals.
In all, 31 stocks appeared on the gainers’ chart while 11 did
otherwise. As of Thursday, the share prices of 24 firms
appeared on the losers’ chart and 25 on the gainers’ chart.
The NSE All-Share Index also rose to 25,701.60 basis points
from 25,563.78 recorded on Thursday.
The oil and gas sector (+433bps) led advances, bolstered by
the continued recovery in Forte Oil Plc (+10.25 per cent) and
gains in Mobil Oil Nigeria Plc (+493bps).
Similarly, the financial services (+85bps) and consumer goods
(+16bps) sectors closed higher, following price appreciations in
Guaranty Trust Bank Plc (+210bps), Zenith Bank Plc (+115bps)
and Tiger Branded Consumer Goods Plc (+902bps), Guinness
Nigeria Plc (+106bps) respectively. The industrial goods sector
closed flat.
FBN Holdings Plc topped the volume chart for the third
consecutive session, trading 30 million units while Nigerian
Breweries topped the value chart for the second consecutive
session, trading 1.9 million units worth N222m.
The NSE ASI and NSE 30 gained 54bps and 69bps, putting
year-to-date returns at -10.27 per cent and -12.42 per cent
respectively.
Following a mild improvement in liquidity to N380bn (previous:
N370bn), interbank placement rates moderated marginally with
the call rate down 9bps to 4.08 per cent.
At the foreign exchange interbank market, the naira closed
unchanged at 199.05/dollar, retracing from an intraday high of
197.50/dollar.
The Chief Executive Officer, Cowry Asset Management Limited,
Mr. Johnson Chukwu, said the signing of the budget into law
would have a significant impact on the real sector of the
nation’s economy.
“In terms of the real sector, the N1.57tn capital expenditure;
the N500bn provided for intervention in the segments relating
to the poor will have the effect of reflating the economy to the
extent that it will create new jobs because when government
spends about N1.57tn, N350bn of that will be paid to
contractors whose debts are outstanding. They will pay off their
existing debts and then the remaining N1.2tn will go into new
and ongoing contracts. So, the contractors will engage new
workers and possibly that will result in increase in demand for
goods and services.
“We are going to see additional pressure on the foreign
exchange market due to the increase in demand for goods and
services.
“On the money market, we are going to see further uptick in
inflation rate, which will force the monetary policy committee to
further tighten monetary policy rate. So, that will lead to an
increase in interest rates. An increase in interest rates will have
a negative effect on the equities market.
The Partner, Corporate/Commercial/Public Sector Group, Olisa
Agbakoba Legal, Mrs. Olabisi Akodu, said the non-passage of
the budget before now had affected all areas of the economy,
including the capital market.
The move, according to her, will boost the purchasing power of
Nigerians and will in turn impact sales volumes of companies.
The Head of Investment Research, Afrinvest West Africa
Limited, Mr. Ayodeji Ebo, said the signing of the budget would
boost investor confidence, adding that industrial growth should
be impacted positively, given a 30 per cent allocation to capital
expenditure.
“We expect to see significant activities in the building materials
and construction space. In terms of the banking space, it will
increase lending opportunities because some of the banks will
need to support the government’s vision,” he said.
He added that the delay of the budget had affected business
activities and compounded the problem of foreign exchange
restrictions.
“The GDP growth in the first and second quarters will be
significantly affected, especially the Q1, because a lot of
business activities have been stalled,” Ebo said.
President Muhammadu Buhari at the signing of the budget had
said the development would trigger concerted efforts to reflate
the Nigerian economy, adding that “a key element of which is
an immediate injection of N350bn into the economy by way of
capital projects.”

http://punchng.com/stock-market-recovers-gains-n4bn-budget-signing/



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Good news. Time to reinvest.
Early pointers that the economy is regaining its lost momentum and picking up steam earnestly