By Chinyere Joel-Nwokeoma
Some financial experts on Sunday called on the Central Bank of Nigeria (CBN) to ensure continuous liquidity in the foreign exchange market to sustained the bullish trend on the Nigerian Stock Exchange (NSE).
They told the News Agency of Nigeria (NAN) in separate interviews in Lagos that the current rally on the stock market could only be sustained with foreign exchange liquidity.
Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University Keffi, said that enhanced foreign exchange liquidity would sustain foreign portfolio investment confidence in the market.
Uwaleke said that the bullish trend was a reflection of the fact that the economy was gradually moving out of recession and should be sustained with friendly policies.
He said that the introduction of the investor-exporter foreign exchange window by the apex bank had boosted foreign portfolio investment in Nigeria.
“The recent report by Fitch concerning improved liquidity in the forex market, as well as the increase in weights for Nigerian equities in the Morgan Stanley Capital Index equally helped to positively influence market sentiments,’’ Uwaleke said.
He said proof was that “foreign investors are returning, stock market performance in recent time has been buoyed by high cap and expensive stocks such as Nestle which is trading close to N1000 per share.”
Uwaleke added that the new pension guidelines which increased the maximum funds that pension funds could invest in the equities market from 25 per cent to 30 per cent was another development impacting on market performance.
Mr Ambrose Omorodion, the Chief Operating Officer, InvestData Ltd., attributed the upward trend in the market to improved economic data driven by the CBN foreign exchange policy.
Omorodion said that relatively low valuation of equities contributed to the ongoing price rally in the market.
He urged the apex bank and the Federal Government to pursue positive economic policies that would bring the country out of recession and as well sustain the current market trend.
NAN reports that the NSE All-Share Index last week appreciated by 1,905.65 or 6.07 per cent to close at 33,276.68 against 31,371.03 achieved in the previous week.
Also, the market capitalisation which opened at N10.845 trillion appreciated by N659 billion or 6.07 per cent to close at N11.504 trillion.