CBN Forex policies trigger Stock Market boom

The Lagos bourse’s All-Share Index (ASI) crossed the 27,000 mark as the index increased by 790.47 points or 2.95 per cent closing at 27,546.68 against 26,756.21 recorded on Tuesday, May 10, 2017.

Similarly, the market capitalisation, which opened at N9.249 trillion, rose by N273 billion or 2.95 per cent to close at N9.522 trillion due to huge gains posted by some blue chips stocks such as Oando Plc.

Reports from Capital Market Analysts noted that Foreign Portfolio Managers are beginning to consider the Nigerian market using the new investor forex window (Investors & Exporters’ FX Window) created by the Central Bank of Nigeria. Also identified is the positive impact of the healthy status accorded Nigerian banks by recently released Moody’s report.

While noting these, the single stronger factor identified by most Market Analysts is the strong Q1 2017 earnings report from companies listed on the stock market, especially earnings from banks and some oil companies.

An Analyst with Afrinvest (West Africa) Limited, Omotola Abimbola, noted that the improvement is due to improvement in some market fundamentals.

“The market has been on a positive run from last week, and it is being driven by improvement in some fundamental market drivers such as solid earnings in Q1 2017 earnings across sectors.

“Also improving economic outlook due to the stable forex market, increasing oil output and global price. Hence, people expect earnings to improve going further.

“Third factor is surrounding economic policy, such as the FX policy of the CBN. It would be recalled that the CBN introduced the Investors & Exporters’ FX Window, which allows for Fx trading. This has triggered confidence of foreign investors,” he stated.

He further expressed that there is a possibility for this bullish trend to continue, as the CBN is aiming to achieve convergence of all Forex windows and investors expecting the apex bank to adopt a market-driven exchange rate in not far distant time.

Also identifying other behind the market new, Babatunde Oladuso, Analyst with Fritova Economics, identified that the recent rating of Nigerian bank by the Moody’s also positively impacted the market.

“The market closed six-month high yesterday (Wednesday, May 10, 2017) mainly due to three factors: good earnings reports, especially for the banking sector, as banking and finance have been the highest market mover and some consumer companies.

“There was a Moody report that gave a clean bill of health on Nigerian banks. The report further stated that since Nigerian economy is recovery, asset quality of the banks would increase, non-performing loans reduced and banks will continue to quote string earnings. Those are the immediate factors,” he stated.

CBN Forex policies trigger Stock Market boom

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