Investors ‘raking in billions’ as coronavirus infections surge in Nigeria

Investors ‘raking in billions’ as coronavirus infections surge in Nigeria

Today, Nigeria’s equity market extended its gaining streak to nine consecutive trading days as the All-Share Index (ASI) appreciated by 0.87% to close at 24,354.25 points as against 24,143.37 points recorded at the close of trading on Wednesday, this brings the year-to-date loss of the Market to 9.27%.

Today’s gain makes it the longest winning streak Investors have had all year. Investors have now raked in over N980 billion in the last nine days alone. Over the same period, Nigeria’s Covid-19 infections have surged by over 220%. Clearly, risk seekers are in deviant of the economic threats posed by increasing Covid-19 infections and they are getting rewarded for it.

Despite the profit-taking in the shares of Banks today, Investors renewed their interest in other companies as the Bulls and Bears equal their positions on the performance table, 20 losers and 20 gainers. Also, since FG eased its lockdown order, we have noticed a sustained increase in volume and value of shares traded.

The Market Capitalization of listed equities also appreciated by 0.87% to close at N12.69 trillion as against N12.58 trillion recorded at the close of trading on Wednesday. With the year-start capitalisation of N12.95 trillion, Investors are now 2% shy of recovering all they have lost this year.

If you are not an ‘unrepentant risk seeker’, please don’t go near the equities market. Leave your investments in the money market where you are sure of capital preservation with some decent returns.

Fx Market Update:

The official interbank market rate of the Naira remained unchanged today at $/N361.00. However, the sustained FX liquidity squeeze at the I & E Fx window worsened sentiments today as the Naira closed weaker by 0.49% (N1.88) with a price of $/N386.38.

Investment Insights: By the way, one of the major factors responsible for the sustained gains recorded in the stock market is because of the Fx liquidity squeeze in the Investors’ & Exporters’ (I & E) Fx window. The I & E Fx window is one of the platforms established by CBN, through which Foreign Portfolio Investors can buy dollars to repatriate the gains they have made trading equities in Naira.

Since the lockdown, CBN has muted supply of dollars to that window, as a result, these Investors are trapped in Nigeria and left with no reason to sell their shares since there are no Fx to repatriate their funds. No sales from foreign investors mean minimal sell pressure on the equities market, as far as equities are concerned, the lesser the selling pressure the higher the possibility that the market will gain consistently and this is what we have seen play out in the equities market since the early days of the lockdown.

In this Covid-19 era, equities are too risky as an investment option except if you are the type that loves risk, over a period of two years you surely will be better for it but if you are averse to risk, please stay clear of the Market.

If you seek risk for higher returns, click on the link to open a stockbroking/share purchase account and trade within 24 hours.

If you don’t like risk but you want to enjoy a decent return that will keep you in the fight against inflation, click to subscribe to our money market fund

Stay home and stay safe, let your money do the work.

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