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Investors’ switch to T-bills affects Nigeria’s stock market negatively in February

Investors’ switch to T-bills affects Nigeria’s stock market negatively in February

The stock market of the Nigerian Exchange Limited (NGX) dropped by N650.5 billion in February 2024 amid corporate earnings by listed companies, as investors divested into the Treasury Bills (T-bills) market.

Investors pulled out from the stock market during the month over the attractive yield on the Central Bank of Nigeria (CBN) on T-bills as the inflation rate increased to 29.9per cent in January 2024.

Specifically, the overall market capitalisation closed February 29, 2024 at N54.707 trillion, dropping N650.5 billion or 1.18 per cent from N55.358 trillion it closed for trading on January 31, 2024.

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Also, the NGX All-Share Index (NGX ASI) dropped to 99,980.30 basis points as of February 29, 2024, about 1,174.16basis points or 1.16per cent decline from 101,154.46 basis points it opened for trading in the month under review.

The stock market in January 2024 gained N14.4 trillion and 35.29 per cent in market capitalisation and NGX ASI, respectively as investors invested in fundamental stocks in anticipation of dividend pay-out and hedging against the double inflation rate.

This brings the investors return in the first two months of 2024 to N13.79 trillion and per cent in market capitalisation and NGX ASI, respectively.

READ ALSO: STOCK MARKET: Investors Lose N12bn

The CBN in March plans to sell N822.63 billion worth of T-bills while for April, it plans to raise N292.20 billion worth of T-bills and for May it wants to sell N388.33 billion worth of T-bills.

The CBN in February sold N1.58 trillion worth of T-bills to the investing public at a 19 per cent interest rate to mop up excess liquidity in the financial system. All tenors of its last auction were oversubscribed- a clear sign of the voracious appetite of investors in the security.

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