Investors inject N198tn in fixed income market

Investors inject N198tn in fixed income market

Investment in the Fixed Income and Currency market defied the prevalent economic climate in the country in 2023, with investors splashing about N196.79tn on short to medium-term instruments on the platform of the FMDQ in 10 months.

Analysis of data obtained from the FMDQ platform by The PUNCH showed that investment grew by 8.9 per cent or N16.07tn compared with N180.72tn invested in the market in 11 months ended November 2022.

The secondary market turnover on the FMDQ Exchange in  November 2023 was N27.87tn, representing a MoM and YoY increase of 28.43 per cent (N6.17trn) and 109.39 per cent  (14.56trn) from October 2023 and November 2022 figures, respectively.

Foreign Exchange, CBN Bills and Money Market transactions dominated the secondary market activity, accounting for 71.68 per cent of the total secondary market turnover in November 2023.

Total spot market turnover for all products traded in the secondary market in November 2023 was N24.89tn, representing a MoM increase of 21.53 per cent (N4.41tn) from the October 2023 figures.

The MoM increase in total spot market turnover was jointly driven by an increase in turnover across all spot market product categories, with contributions by FX, MM and FI transactions increasing MoM by 18.31 per cent  (N0.67tn), 18.94 per cent (N0.93trn) and 23.68 per cent (N2.82tn), respectively.

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The increase in MM turnover was solely driven by an uptick in  Repos/Buy-backs,  offsetting the  MoM decline in Unsecured  Placement/Takings transactions. In contrast, the uptick in FI turnover was driven by a MoM increase across all FI products, excluding OMO  Bills which decreased in the review period.

Nigeria’s economic situation was aggravated by the removal of subsidy on petrol in May and the unification of exchange rates in both the official and parallel markets by the government of President Bola Tinubu in 2023.

Notwithstanding the impact of the twin policies which drove inflation to 28.2 per cent as of November 2023, foreign portfolio investment into the largest economy in Africa increased as well as gross domestic product.

As reported by our correspondence, FDI inflow on the Nigerian Exchange Limited increased by 45.93 per cent to N13.79bn in August 2023 from N9.45bn recorded in July 2023.

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Foreign portfolio inflow of investments had appreciated in May 2023, the same month as the inauguration of President Bola Tinubu, signalling positive investor sentiments.  However, it has been declining in subsequent months to N22.72bn in June, and N9.45bn in July before the upward movement to N13.79bn at the end of August.

Similarly, the nation’s GDP as released by the National Bureau of Statistics as of the third quarter in 2023, grew by 2.54 per cent (year-on-year) in real terms.

‘’This growth rate is higher than the 2.25% recorded in the third quarter of 2022 and higher than the second quarter of 2023 growth of 2.51%. The performance of the GDP in the third quarter of 2023 was driven mainly by the Services sector, which recorded a growth of 3.99% and contributed 52.70% to the aggregate GDP,’’ NBS stated in a report.

On the flip side, investment in the Nigerian Exchange Limited closed with over 13tn gain for investors in the equity market, confirming the confidence of investors in the policies of the government.

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This gain nearly tripled the figure recorded in 2022, which stood at N5.619tn, after the market capitalization closed at N27.915tn.

At the close of the year’s trading activities on Friday, investors on the local bourse had gained N13.003tn as the market capitalisation closed at N40.917tn. Similarly, the benchmark index of the exchange, the All-Share Index, had also appreciated. Its year-to-date gains stood at 45.90 per cent with the ASI at 74,773.77 points at the end of trading in 2023. This is a significant increase as the ASI had closed 2022 with YTD of 19.98 per cent.

President Tinubu in his new year message on January 1, had assured Nigerians and investors that he fight every obstacle that impedes business competitiveness in Nigeria in 2024.

He said, ‘’ I will not hesitate to remove any clog hindering our path to making Nigeria a destination of choice for local and foreign investments.’’

Since he assumed office as president, Tinubu has made enormous policy changes in his quest for economic recovery.


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