NSE gains N259bn as MPC retains interest rate at 11.5%; Experts applaud CBN’s rates retention
By Chinyere Joel-Nwokeoma
Lagos, Jan. 26, 2021
The Nigerian Stock Exchange on Tuesday extended growth by N259 billion following interest in Airtel Africa, just as the Monetary Policy Committee (MPC) retained the Monetary Policy Rate (MPR) at 11.5 per cent.
Specifically, the market capitalisation, which opened at N21.494 trillion rose by N259 billion to close at N21.753 trillion.
The MPC, at the 277th edition of its meeting which ended on Tuesday, had unanimously voted to retain the MPR and other key parameters at their prevailing rates.
The MPR is the interest rate at which the Central Bank of Nigeria lends to commercial banks.
Apart from retaining MPR at 11.5 per cent, the MPC retained the asymmetric corridor around the MPR at +100/-700bps, Cash Reserves Ratio at 27.5 per cent, while liquidity ratio was also retained at 30.0 per cent.
The market gain at the nation’s bourse was driven by price appreciation in large and medium capitalised stocks, amongst which are Airtel Africa, Flour Mills, Lafarge Africa, MTN Nigeria Communications and Fidson Healthcare.
Market breadth was positive with 32 gainers, relative to 19 losers.
R.T.Briscoe led the gainers’ chart in percentage terms with 10 per cent to close at 22k per share.
Champion Breweries followed with 9.81 per cent to close at N2.35, while Universal Insurance rose by 9.52 per cent to close at 23k per share.
African Alliance Insurance garnered 9.09 per cent to close at 24k, while Fidson Healthcare appreciated by 8.60 per cent to close at N5.05 per share.
Conversely, John Holt dominated the losers’ chart in percentage terms, losing 10 per cent to close at 45k per share.
Japaul Gold and Ventures trailed with 9.30 per cent to close at 78k, while Seplat lost 9.26 per cent to close at N490 per share.
Academy Press dipped 9.09 per cent to close at 40k, while Niger Insurance shed 7.41 per cent to close at 25k per share.
Transactions in the shares of Transnational Corporation of Nigeria (Transcorp) topped the activity chart with 45.931 million shares valued at N50.597 million.
AXA Mansard Insurance followed with 34.73 million shares worth N48.64 million, while Japaul Gold and Ventures traded 29.44 million shares valued at N23.04 million.
Sovereign Trust Insurance traded 26.44 million shares valued at N7.30 million, while Lasaco Assurance transacted 25.78 million shares worth N10.70 million.
In all, the total volume of trades increased by 40.43 per cent to 467.89 million units valued at N5.57 billion exchanged in 5,990 deals.
This was in contrast with 333.09 million shares worth N2.64 billion achieved in 5,640 deals on Monday.
Meanwhile, the Association of Capital Market Academics of Nigeria (ACMAN), on Tuesday said that rates retention by the Monetary Policy Committee (MPC) was in line with market expectations.
ACMAN President, Prof. Uche Uwaleke, disclosed this in an interview with the NAN in Lagos, while reacting to the outcome of the first MPC meeting.
Uwaleke who lauded rates retention said the MPC’s unanimous decision was consistent with market consensus.
“The MPC did not disappoint. Their unanimous decision is consistent with market consensus and expectations.
“By doing so, the Central Bank of Nigeria will have some more time to monitor macroeconomic response to all its interventions in the wake of COVID-19 pandemic,” he said.
Uwaleke also a Professor of Capital Market at the Nasarawa State University Keffi, said that rates retention was due to rising inflation and stabilisation of the exchange rate.
“As usual, the choices before the MPC was whether to reduce, increase or hold the rates.
“While on the one hand, a rate cut appeared justified by need for the CBN to support economic recovery efforts of the government.
“On the other hand, the need to stabilise exchange rate as well as tackle the rising inflation favoured tightening monetary policy.
“This presented a dilemma which the MPC rightly managed by maintaining the status quo and holding the rates in a bid to strike a balance, between the two seemingly diametrically opposing sides of enabling output growth and curbing rising inflation,” Uwaleke said.
Also, Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said the rates were retained in order not to short live the seeming economic recovery.
Omordion said that the development would further support the growth of the equity market ahead of 2020 earnings season.
He noted that the prevailing negative returns in the fixed income market would make investors to seek for higher returns at equity market until yields start improving.
NAN reports that the MPC at the end of the 277th edition meeting unanimously voted to retain the Monetary Policy Rate (MPR) and other key parameters at their current rates.
Consequently, the committee retained MPR at 11.5 per cent, the asymmetric corridor around the MPR at +100/-700bps, Cash Reserves Ratio at 27.5 per cent, while liquidity ratio was also retained at 30.0 per cent.
