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Markets

How to boost investors’ confidence in equity market – EFG Hermes

The price-fixing regime in the foreign exchange (forex) market has been a deterrent to Foreign Portfolio Investors (FPIs).

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Nigeria capital market needs reforms for continued sustainable growth - CEO, EFG Hermes

Investors’ confidence is key to every stakeholder of any equity market, as it determines whether the bourse would be dominated by either the bulls or bear. But how can such confidence (both local and foreign investors) be boosted or retained?

These were discussed at the recent virtual media round-table organised by the EFG Hermes Nigeria.

As far as the Chief Executive Officer, EFG Hermes Nigeria, Lilian Olubi, is concerned, the price-fixing regime in the foreign exchange (forex) market has been a deterrent to Foreign Portfolio Investors (FPIs). She called on the regulator to reduce focus on FX management.

She said, “We believe it portends a challenging situation for foreign portfolio investors, who in addition to the low yields are also dealing with FX shortages.

“For local investors, while the concern for negative real returns is apparent, it remains a market where they still have to hold most of their liquidity and this will continue as they anticipate new developments that would either boost the fixed income market while making some shift to equities and other asset classes.”

She further explained that there has been a focus on managing the foreign exchange price and the effect of that action has a huge effect on others on the market, including dampening investors’ confidence, asking the Central Bank of Nigeria (CBN) to liberalise the market.

In his own case, Chief Executive Officer, EFG Hermes Frontier, Ali Khalpey, explained that the FPIs showed little interest in the Nigerian equities market. He argued that the uncertainty around the forex rate and the possibility of repatriating dollars out of the country still posed serious challenges.

He said, “FPIs will not come knowing that the forex market is managed and not market reflected. It is very difficult to attract capital when you are dealing with such low yields and high inflations and then you still try to control the forex rate.”

What you should know

  • As of 28 February 2021, total transactions at the nation’s bourse decreased by 7.26% from N232.46billion (about $590.82million) in January 2021 to N215.58billion (about $525.21million) in February 2021.
  • The performance in February 2020 when compared to the performance in February 2021 (N148.50billion) revealed that total transactions increased by 45.17%. In February 2021, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by circa 42%.
  • Further analysis of the total transactions executed between the current and prior month (January 2021) revealed that total domestic transactions decreased by 17% from N184.94billion in January to N153.51billion in February 2021.
  • However, total foreign transactions increased by 30.62% from N47.52billion (about $120.78million) to N62.07billion (about $151.23million) between January 2021 and February 2021.

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Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Markets

Tesla plunges as GameStop posts gains   

Stocks took a drive on Monday with Nasdaq plunging (-0.98%) at the end of the trading session.

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Stocks took a drive on Monday with Nasdaq plunging (-0.98%) at the end of the trading session. The S&P 500 decreased by (-0.53%) and the Dow made a gain of (-0.36%). After a Tesla vehicle suspected to be without a driver crashed into a tree north of Houston on Saturday, killing two passengers, the electric-car maker’s stock fell 3.4%.

The stock had the greatest negative impact on the S&P 500 and Nasdaq Composite Indexes. Tesla’s stock price was weighted down by an 8.4% plunge in bitcoin over the weekend, in which it has a stake.

The yield on 10-year Treasuries was at 1.58%, after falling six base points in the U.S. trading session.

READ: Elon Musk gains $19bn in 3 days, gap with Jeff Bezos shrinks to $4bn

  • The stock of GameStop Corp soared 6.3% after the announcement of its CEO’s resignation.
  • Nvidia’s stock fell 3.5% after the UK government announced it would investigate the national security ramifications of Nvidia’s $40 billion acquisition of British chip designer ARM Holdings, creating doubts about the transaction.

Top gainers  

  1. Harley-Davidson up 9.68% to close at $44.29
  2. Albemarle up 3.60% to close at $157.50
  3. Morgan Stanley up 1.83% to close at $80.03
  4. Charles Schwab up 1.76% to close at $65.88
  5. Bank of NY Mellon up 1.61% to close at $46.81

READ: S&P 500 sets record highs on the back of tech stocks

Top losers

  1. Altria down -6.17% to close at $49.08
  2. Arconic down -6.07% to close at $26.02
  3. Synopsys down -3.88% to close at $250.64
  4. Cadence Design down -3.61% to close at $141.94
  5. Broadcom down -3.51% to close at $462.00

READ: Wall Street dips in expectation of inflation report

Outlook

  • As bitcoin suffered a beating over the weekend, crypto stocks like Riot Blockchain and Marathon Digital both fell more than 8%. Bitcoin was down 0.7% at the time of writing.
  • Speculators are expecting a recovery as the market opens today.
  • Nairametrics, however, advises cautious buying in this era of growing uncertainties.

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Cryptocurrency

Dogecoin post weekly gains of over 450%, more valuable than Barclays and Credit Suisse

The listing of DOGE on Coinbase and other related institutional-focused exchanges could make DOGE’s value rise as high as $1.

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doge

In recent weeks, Dogecoin (DOGE) has become the darling of many crypto traders and investors as it rallied by more than 450% amid high buying pressure.

Even after earlier pullbacks, its current market valuation of about $35 billion makes it more valuable than century-old banks like Barclays and Credit Suisse which have a valuation of $32 billion and $23.9 billion respectively.

The crypto asset, at the time of writing, was the only profitable crypto in the top 5, triggered by Twitter posts from Elon Musk, one of the world’s most powerful and wealthiest person alive.

READ: Crypto market surges above $2 trillion, as Bitcoin stages a huge comeback above $60,500

Market pundits argue that the credence from the world’s leading billionaires like Elon Musk and Mark Cuban might have given the fast-rising crypto enough support amid the recent price correction ongoing in the flagship crypto market.

Crypto pundits also argue that the listing of DOGE on Coinbase and other related institutional-focused exchanges that offer altcoin derivatives could make its value rise as high as $1.

READ: SEC ban on foreign stocks denies Nigerian investors of generational wealth

At the time of writing this report, Dogecoin traded at $0.409118 with a daily trading volume of $35.3 billion. It is currently the fifth most valuable crypto by market value surpassing the likes of Tether, Cardano, and Polkadot.

Dogecoin is a type of digital coin that is decentralized and facilitates peer-to-peer digital transactions. This means you can send money online with much ease. It is usually referred to as “the internet currency.”

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