Business Capital Markets

Experts seek monetary policies to sustain stock market growth

As the nation’s bourse winds down for 2020 in green, capital market experts have called for accommodative monetary policies to support economic growth.

They said this in series of interview with the News Agency of Nigeria (NAN) in Lagos, while reacting to the Nigerian Stock Exchange (NSE) emergence as the best-performing stock market among the 93 equity indexes being tracked by Bloomberg across the world.

A financial economist and Professor of Capital Market at Nasarawa State University, Keffi, Uche Uwaleke, called for an accommodative monetary policies that would support economic growth.

Uwaleke urged the Central Bank of Nigeria (CBN) to pursue a low interest rate environment through accommodative monetary policies to sustain market rally in 2021.

He attributed the stock market rally to investors’ preference that shifted to the riskier equities market that offered returns higher than inflation rate.

“The major reason is the fact that other competing asset classes such as fixed income securities lost their attractiveness owing to CBN policies which lowered yields,” he said.

Also, the Chief Operating Officer, InvestData Ltd., Mr Ambrose Omordion, said that rates must remain low to drive economic recovery and sustain stock market growth.

Omordion urged the apex bank to pursue friendly policies to boost economic activities and investment education to attract more participants to the market.

“Stock trading education will help the market create jobs for Nigerian youths and reduce insecurity in the system today.

“Stock market dynamics and history play out in different demension with policies from regulators and government at any time,” Omordion said.

According to him, low interest rates and yields in fixed income market supported the stock market as funds are entering equity space for high higher, due to rising inflation.

Records of trading on the NSE as of Dec. 29, showed that the equity market rose by 45.70 per cent year-to-date when compared with a loss of 14.60 per cent achieved in 2019.

At the close of transactions on Dec. 29, the All-Share Index of the Exchange during the review under period rose by 45.70 per cent year-to-date to close at 39,110.17 against the opening year index of 26,842.07.

Also, the market capitalisation which opened for the year at N12.958 trillion inched higher by N7.49 trillion to close trading on Dec. 29 at N20.446 trillion. (NAN)

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