Lagos — Expectations of high returns on stocks and investor confidence in some sectors have buoyed the Nigerian capital market, despite efforts by the countrys central bank to mop up liquidity through the sale of high-yield notes.
At the end of trading Wednesday on the Nigerian Stock Exchange here, the food and beverages, and banking sectors led in price appreciation. For the second day of trading in the week (Monday was a public holiday here), Raheem Mohameed, a broker, said the market was "a little bullish."
Nestle, the food company, led 22 others who gained in prices, while 22 others, led by United Bank for Africa, one of Nigeria's biggest four banks, lost in prices.
The banking sector, said Mohammed, "is where most investors and brokers have their confidence. Most of these banks have weathered the storm," he told Allafrica.com.
The Central Bank of Nigeria is issuing 180-and 360-day certificates by which it says it hopes to mop up excess liquidity in the Nigeria banking.
The CBN says the 180-day certificates will bear an interest of 19 percent, while the 360-day notes will bear an interest rate of 20 percent.
But Mohammed says these rates are not enough to attract investors who want to get what the market has to offer. "There is no way you can compare that with a rate of 40% to 50%," he said. On the average, says Mohammed, an investor can make at least a return of 50 percent per annum, a rate he says the money market cannot match.
