Onyema Attributes Stock Market Rebound To CBN Policies

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The bullish run of equities in the Nigerian Stock Exchange market has been credited to the recent policies of the Central Bank of Nigeria which restricted local investors from participating in the Open Market Operations and also cut interest rate.

Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said the policies which were announced as part of the stimulus for the economy which suffered doubled shocks from the crude oil price war between major producers, Saudi Arabia and Russia, as well as the coronavirus pandemic, have caused investors to move their funds into equities.

Onyema, who said this in a forum in Lagos at the weekend, pointed out that investors are always in search of higher returns on investments and that the policies have made equities attractive to investors.

THEWILL recalls that the Governor of the CBN, Mr. Godwin Emefiele announced multiple interventions to help the economy rebound from the double shocks.

The NSE All-Share Index and market capitalisation both appreciated by 5.30 per cent to close the week at 28,415.31 and N14.852 trillion respectively.

Onyema said: “As the world is now in a recovery mood and economies are opening up, we are seeing investors react to these policy changes. As you know, the markets are indicators of what would happen in the economy.

“So, the equities market is just reflecting that. I must say that some of the policy changes I made reference to include the CBN policy that domestic institutional investors should stop participating in the OMO market.

“That has driven significant funds into the Nigerian Treasury Bills (NTB) market and some of those funds have found their way into the equities market. We have also seen a cut in interest rate.

“That was a significant move in support of equities as an asset class. What investors tend to do is to look for yield.”

“Given the record dividend yield available in the Nigerian market and given the strong fundamentals of a number of companies that are listed on the Exchange, it makes sense that as investors try to rebalance their portfolio, they would look at equities.

“There have also been a number of fiscal policies that have been very supportive of the market. So, I commend the CBN and the CBN Governor for their thought leadership and generally their leadership in attacking the Covid-19 and in taking measures like cutting interest.”

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