Bonds currently more profitable than T-bills: Nigerian equities review

Nigeria's equities market opened the week on a positive note with a flurry of results pouring in, but Chief Research Officer at Blue Vertex, Dare Fajimolu, believes that the market is facing weak investor sentiments that are hindering significant growth. In a recent interview with CNBC Africa, Fajimolu discussed the lackluster performance of the market, emphasizing the slow growth and subdued reactions to recent results. Fajimolu noted that despite the release of results from companies like Access and Fidelity Bank, investor reaction remained tepid due to the overall weakness in market sentiment. The disposable income of domestic investors has tightened, leading to a shift towards long-term investment strategies rather than short-term gains. This cautious approach is reflective of the challenging economic conditions in Nigeria. When asked about preferred instruments for long-term investment in the equity market, Fajimolu highlighted tier 1 banks as a reliable option. These banks, despite operating in a difficult environment, have maintained healthy asset quality and have the potential to inject capital into the economy. Fajimolu also discussed the impact of recent interventions by the Central Bank of Nigeria (CBN) on the equities market. The CBN's directives aimed at encouraging commercial banks to lend to the private sector have had minimal impact on equities, according to Fajimolu. While some investors may shift from treasury bills to corporate bonds, the overall sentiment remains cautious. The uncertainty surrounding the financial implications of CBN policies has led investors to adopt a wait-and-see approach, further dampening market activity. Despite the CBN's efforts to regulate the banking sector for the benefit of the economy, Fajimolu believes that the primary focus is not on supporting the equities market specifically. The CBN's objective is to drive overall economic activity, leaving investors to assess the potential impact on banks' financials and asset quality. In conclusion, the weak investor sentiments continue to plague Nigeria's equities market, creating a challenging environment for growth and investment. With caution prevailing among investors and uncertainties surrounding policy interventions, the market faces an uphill battle to regain momentum and attract significant investment.