Investors have
continued to seek safe haven in bonds over equities, as trading
activities at the bond market now increases on a weekly basis.
Available data at
the Nigerian Stock Exchange (NSE) showed that a turnover of 204.56
million units worth N187.204 billion was recorded last week at the bond
market, 20.35 per cent higher than the 169.96 million units valued at
N155.711 billion exchanged during the previous week.
A fortnight ago, the
bond market also increased by 6.34 per cent in turnover while
activities at the stock market declined by 42.1 per cent.
Analysts say the
bond market is enjoying better patronage from investors because bonds
are secured products of the Exchange with guaranteed income and capital
reimbursement, while equities are not and are more volatile in nature.
Bola Oke, a finance
analyst at WealthZone, an investment management firm, said although
equities have higher returns, “their volatility drove investors to the
bond market which offers guaranteed returns.”
She said most of the
activities at the bond market involve transactions of institutional
investors and fund managers. “Hardly will you see retail investors in
the bond market because investment there requires huge fund,” Ms. Oke
said.
Ikazoboh’s advice
Emmanuel Ikazoboh,
the interim administrator of the NSE, had advised market operators to
invest in fixed income securities to lower their risk exposure in the
capital market.
“Awareness is
gradually rising regarding investments in bond as many state governments
and corporate entities have applied to raise funds on the market via
bonds. It must be noted that investment in bonds guarantees a fixed
income. Until the late eighties, the bulk of investment through the
Exchange was in debt securities, before equity investments took the
centre stage,” Mr. Ikazoboh had said.
Measuring by
turnover volume, the most active bond was the 4 per cent Federal
Government of Nigeria (FGN) Bond April 2015 (7th FGN Bond 2015 Series 2)
with a traded volume of 46.43 million units valued at N35.441 billion.
It was followed by
the 10 per cent FGN July 2030 (7th FGN Bond 2030 Series 3) with a traded
volume of 38.2 million units valued at N29.890 billion.
Of the available 33 FGN Bonds, only 24 were traded during last week, compared to the 13 recorded in the preceding week.
Stocks down
Meanwhile, investors
at the stock market yesterday recorded more losses on the value of
their equities, as market closed trading on negative note.
The NSE market
capitalisation of the 194 First-Tier equities closed on Monday at N7.872
trillion after opening the day at N7.943 trillion, reflecting 0.89 per
cent decline or N71 billion losses. The market has lost over N205
billion in the last three trading days.
The All-Share Index
also declined after Monday’s trading by 0.89 per cent or 223.64 units to
close at 24,639.74 basis points from 24,863.38.
