Monday, 20 March 2017

Market operators urge CBN to reduce interest rates to accelerate growth

Some capital market operators on Monday advised the Central Bank of Nigeria (CBN) and Debt Management Office (DMO) to reduce yield rates on Treasury Bills (TBs) and bonds to accelerate economic growth. They told the News Agency of Nigeria (NAN) in Lagos that the two agencies should bring down TB and bonds yield rates to encourage banks to lend to the real sector. Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd. in Lagos, said commercial banks had abandoned their core banking duties to seek haven in bonds and TBs due to their high yield rates as high as 18 per cent. Kurfi said that banks should be compelled to lend to the manufacturing sector to accelerate economic growth by reducing the bonds and TB yield rates. According to him, interest accruable to these instruments should be reviewed down to 13.01 per cent as it is the case with the Federal Government savings bonds that closed on March 17. Kurfi also urged the apex bank to pursue positive economic policies that would sustain the current gains in the foreign exchange market and inflation rate. He suggested that the Monetary Policy Rate (MPR) should be lowered to 13 per cent in the near future with the appreciation of the naira and further drop in inflation rate in view. Kurfi expressed optimism that stock market activities would close on the upbeat this week with investors’ anticipation of positive 2016 earnings from commercial banks. He said that more banks were expected to release their results this week to beat March 31 deadline stipulated by the Nigerian Stock Exchange (NSE) for companies whose financial year ended on Dec. 31. NAN reports that only three banks namely – Zenith Bank, Access Bank and Guaranty Trust Bank- have released their 2016 audited results so far. Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., advised policy makers to embrace friendlier policies to sustain economic growth. Omordion said that transaction of the NSE would likely oscillate this week due to profit booking and reactions to expected good earnings as more financial results were expected in the market. He urged investors to combine technical and fundamental analyses in trading decisions to know the support and resistance levels. NAN reports that a turnover of 1.03 billion shares worth N7.98 billion were exchanged by investors in 13,441 deals on the NSE last week against 1.02 billion shares valued at N12.46 billion `traded in 16,400 deals in the preceding week. The Financial Services Industry led the activity chart with 853.41 million shares worth N4.27 billion in 7,904 deals, thus contributing 82.91 per cent and 53.50 per cent to the total equity turnover volume and value terms, respectively. The Oil and Gas Industry followed with 80.25 million shares valued at N1.15 billion traded in 1,443 deals. The third place was occupied by Conglomerates sector with turnover of 45.77 million shares worth N83.47 million achieved in 596 deals. The NSE All-Share Index appreciated by 415.15 points or 1.64 per cent to close at 25,653.16 against 25,238.01 achieved in the preceding week. The market capitalisation, which opened at N8.734 trillion, appreciated by N144 billion or 1.64 per cent to close at N8.878 trillion

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