Fixed Income N5 Trillion Maturing Security to Sustain Nigerian Stock Exchange

Experts have said the N5 trillion from maturing securities in the fixed income market would sustain the Nigerian Stock Exchange (NSE) momentum in the near-term.

The experts also added that the decision of the Central Bank of Nigeria’s led Monetary Policy Committee (MPC) to maintain the current policy rate would help maintain balance in the market, even with last week’s bearish trend.

Analysts at Atlass Portfolio, who commented in the company’s 2021 economic outlook, said most of the funds from the maturing securities would be invested in the nation’s equities but called for caution as any uptick in yields in fixed income could cut the rally short.

They said: “We expect the rally to continue in the short term, with over N5 trillion in fixed income expected to mature in 2021; some of which will be divested into the equities market.

“Also, with the re-opening of the economy and many businesses returning to full operation in 2021, the potential of listed companies recording profit will improve. Many of the top tier banks and large cap stocks posted good results in third quarter 2020. This shows that they were able to manage the impact of the pandemic well.

“However, we note that the current rally in the market is not backed by strong fundamentals and any possible increase in yields of fixed income instruments could pose a threat to the rally.”

The experts advised investors to pay attention to highly liquid stocks and stocks with good fundamentals and dividend paying history.